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HSBC Adds Six Currencies To Offshore Yuan-Trading Service

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HSBC Adds Six Currencies To Offshore Yuan-Trading Service .

-- HSBC rolls out electronic trading of offshore yuan against six currencies...

-- ...including the euro, pound, Mexican peso and the Hong Kong, Singapore, and Canadian dollars

-- HSBC will offer offshore yuan crosses on interbank trading platforms for first time

By Jessica Mead

LONDON (Dow Jones)--Offshore yuan trading took another step forward Tuesday after HSBC Holdings PLC (HBC) announced it is now streaming so-called CNH rates against a range of currencies other than the dollar on the market's leading electronic inter-dealer trading platforms.

Electronic trading of the offshore yuan, or CNH, against the dollar has become relatively commonplace in global currency markets but so far direct trading of other currencies such as the euro against CNH has remained limited.

HSBC said in a press statement that this was the first time these exchange rates would be continuously quoted on electronic interbank platforms such as those run by Thomson Reuters and ICAP-owned EBS.

"No other bank currently offers CNH [cross rates] on an interbank basis, a feature we believe will be pivotal to facilitating market liquidity," said Frederic Boillereau, HSBC's Global Head of FX and Commodities.

Other banks including Deutsche Bank AG (DB) are expected to launch similar services. Barclays PLC (BCS) already offers electronic trading in CNH against the major currencies and also some Asian ones on its BARX platform but does not stream to the principal interbank venues, a person familiar with the matter said.

Six currencies besides the dollar can now be traded directly against the offshore yuan: the euro, sterling, the Hong Kong dollar, the Singapore dollar, the Canadian dollar and the Mexican peso, HSBC said.

Traditionally, currency traders looking to conduct a transaction in the euro against CNH had to trade in the euro against the dollar first and then trade the dollar against the offshore yuan, it said.

HSBC said in the statement that its new service avoids doing just this and thereby reduces the transaction costs for its clients.

The new offering from HSBC follows a series of steps to develop the offshore yuan market. Earlier Tuesday, the Hong Kong Monetary Authority further eased restrictions on banks' yuan trading by removing limits on banks' bets on the currency's future movement--another small step aimed at boosting liquidity for the offshore yuan market.

London and Hong Kong bankers also agreed Tuesday at a joint private-sector forum to step up efforts to boost liquidity.

Absa Capital, an affiliate of Barclays, last month launched an electronic facility to enable direct trading in the South African rand against the offshore Chinese yuan on its electronic trading platform PACE FX.


Interesting, thanks Pan

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