miƩrcoles, 18 de abril de 2012

miƩrcoles, abril 18, 2012


April 16, 2012 11:01 pm

LME eyes renminbi move for metals




The London Metal Exchange is considering offering traders the chance to settle its contracts in the Chinese renminbi, a move that could lead to its dropping sterling after 135 years.


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The move, still at an early stage of discussion, would highlight the shift in power in global metals markets.

 




When the LME was established in 1877, Britain was one of the world’s most important manufacturing powerhouses, and the LME’s benchmark contracts for delivery in three months were designed to mirror the length of time needed to reach British ports for shipments of copper from Chile and tin from Malaysia.




But now China is the dominant force in the market, accounting for more than 40 per cent of global demand for most metals and a rapidly increasing share of trading in LME futures.


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While LME contracts – which serve as global benchmarks for metals from aluminium to zinc – are denominated in dollars, the exchange offers companies the option of settling and clearing their trades in euro, yen and sterling.






The LME is asking its members as part of a survey to help the exchange design its planned new clearing house whether they would like the renminbi to be added to the roster of currencies on offer for settling and clearing, and sterling dropped. The LME plans to maintain its benchmark denominated in US dollars. “We are always looking at new ways to help the market,” the exchange said.




The move would be a final blow to sterling’s role in metals trading. The LME’s flagship copper contract was denominated in sterling until 1993, when it switched to dollars in the wake of the Black Wednesday sterling crisis.




The use of the UK currency to settle and clear LME contracts has dwindled to negligible levels in recent years, brokers say. “I haven’t traded a contract in sterling for five years,” said the head of one large LME brokerage.




The use of the renminbi in commodities markets is, on the other hand, slowly increasing as China moves to internationalise its currency. Hong Kong Exchanges & Clearing (HKEx) has announced plans for a range of renminbi-denominated commodity futures, while the Hong Kong Mercantile Exchange (HKMEx) is planning to launch renminbi gold and copper contracts.


.The Chinese currency would need to become more freely tradable before it could be used for LME trading and settlement. Over the weekend Beijing announced the latest step in the internationalisation of the renminbi, widening its daily trading band.




The discussion at the LME reflects the growing involvement of Chinese companies on the exchange. The LME announced this month that Bank of China had applied to become its first Chinese member.



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It opened an office in Asia in 2010 and members of staff now have business cards printed in both English and Mandarin.




Moreover, HKEx is seen as a frontrunner to acquire the LME, with final bids due to be submitted by May 7. CME Group, ICE and NYSE Euronext are also bidding.



Copyright The Financial Times Limited 2012

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