The Hong Kong Mercantile Exchange (HKMEx), a commodities and derivatives alternative trading system (ATS), launched on 18 May, offering high-speed access to the mainland Chinese commodities market across time zones.
The market, which opens from 08.00 to 23.00 HKT, currently offers a 32-ounce, US dollar denominated, gold futures contract. On the first day, 3,929 contracts with a value of US$188.54 million were traded.
By offering exposure to mainland commodities prices using its high-capacity trading platform, Pearl, HKMEx is expected to prove attractive to market participants for arbitrage and hedging purposes.
HKMEx’s Pearl trading system is based on TRADExpress technology, developed by system provider Cinnober, which claims to be the fastest commodity trading platform available. It allows HKMEx to handle high liquidity and trading volumes, as well as supporting the rapid development of new contracts, services and types of trading. In addition to trading and post-trade capabilities, Cinnober delivers the exchange’s market surveillance tool Scila Surveillance.
Central counterparty LCH.Clearnet acts as the clearing house for all HKMEx trades.
Market access is available via FIX 4.4 or proprietary application protocol interface. HKEx also offers its own trading front-end interface, based on technology provider Patsystems' J-Trader solution, which is white-labelled as Pearl Plus.
This offers functionality including multi-exchange spreading and one-click scalping, real-time profit and loss and protection of orders with trailing stops and brackets. Pearl Plus can be deployed to customers over the internet, via wireless or local area networks, or through leased lines allowing firms to begin trading quickly.
HKMEx is hosting its core systems in the Equinix Hong Kong (HK1) International Business Exchange data centre. Financial market participants who wish to optimise the speed of their transactions can do so through direct access to HKMEx within the Equinix HK1 facility.
Albert Helmig, president of HKMEx, said, “We are well on our way to becoming the world's gateway for commodities trading with China. With our strategic location in Hong Kong, HKMEx is ideally positioned to facilitate trading in commodities between China and the rest of the world.”
The exchange received authorisation from Hong Kong's regulator, the Securities and Futures Commission, as an ATS provider on 27 April. This grants HKMEx the right to offer market participants, through its member firms, the use of its state-of-the-art electronic platform to trade commodities. It began trading with 15 broking members including BOCI Securities, ICBC International Futures and TG Securities, and three clearing members: Interactive Brokers, MF Global, and Morgan Stanley & Co International.
HKMEx shareholders include China’s Industrial and Commercial Banking Corporation and shipping giant COSCO Group, as well as Russia’s commodity, mining and energy firm En+ Group, among others.