Bloomberg News

Hong Kong Mercantile Exchange Forced to Shut on Lack of Revenue

May 19, 2013

Hong Kong Mercantile Exchange, the commodities trader whose chairman headed the 2012 election campaign for the city’s Chief Executive Leung Chun Ying, has shut down after it ran out of money.

Revenue isn’t enough to support its operating expenses and the commodities exchange has handed back its license, the Securities and Futures Commission said in a statement yesterday. HKMEx is prohibited from trading, the SFC said.

The exchange will reapply for the license after it completes a rights issue to raise $100 million in June, Hong Kong’s Ming Pao newspaper reported today, citing Chairman Barry Cheung. Cheung is the largest single shareholder of the commodities trader with a 56 percent stake, according to Ming Pao.

Aubrey Ho, a spokeswoman for HKMEx, didn’t return calls to her office outside normal business hours today seeking comment.

HKMEx started trading two years ago and competition intensified after Hong Kong Exchanges and Clearing Ltd. acquired the London Metal Exchange last year.

The trader has about 100 employees and has no plans for layoffs, Ming Pao reported, citing Cheung. HKMEx will arrange settlement pricing for its 200 outstanding contracts, according to the report.

Cheung is a non-official member of the Executive Council of Hong Kong. He also chairs the city’s Urban Renewal Authority.

To contact the reporter on this story: Vinicy Chan in Hong Kong at vchan91@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net


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