Global multi-asset brokerage Newedge is using a solution from derivatives trading application provider FFastFill to provide qualified buy-side clients with access to China's futures markets.
The solution will use FFastFill's software-as-a-service (SaaS) platform to offer Newedge's buy-side client's access to futures products traded on the Shanghai Futures Exchange (SHFE), Dalian Commodities Exchange (DCE), Zhengzhou Commodities Exchange (CZCE) and China Financial Futures Exchange (CFFEx), via a single trading screen.
DCE and CZCE are primarily agricultural exchanges, CFFEx – the only financial futures market in China – trades the CSI 300 index future, and SHFE operates as one of three global base metals price-setting markets along with the London Metal Exchange (LME) and the New York Mercantile Exchange's COMEX.
As part of the new offering, FFastFill is also enhancing the spreading functionality on its platform for users that require hedging instruments in China for price discovery. This will enable traders to automate their spread trading strategies and reduce the chance of legging risk, i.e. the risk of not being able to fulfill a particular leg of a spread or trading strategy at the price required.
FFastFill's spread trading functionality is based on software developer Progress Apama's multi-asset class complex event processing platform and uses proximity hosting to access major futures exchanges.
“Clients will be able to trade Chinese and other global contracts as a single order, spreading between any two contracts offered from around 45 exchanges on this platform,” said Mike Frawley, global head of metals, Newedge. “This is the first platform to offer access in English to Chinese exchange contracts. Further, the platform offers monthly spreading functionality within Chinese exchange-traded contracts.”
“Cross-exchange trading between the LME, COMEX and Shanghai is extremely volatile and illiquid,” added Hamish Purdey, CEO, FFastfill. “Working closely with the metal trading community, we have expanded our spreading functionality to cater for the individual characteristics of these exchanges and their trading rules. Additionally, establishing connectivity to China's agricultural futures market is an important step for FFastFill and our clients, creating access to a market of enormous potential.”
Newedge, a 50/50 joint venture between Société Générale and Crédit Agricole, operates in China via Citic Newedge Futures.