Intensifying trade tension between China and the United States has weighed on global markets in the past weeks. The RMB has declined to its weakest level against the US dollar this year, falling by more than 4 per cent in the past three weeks before stabilising. On the back of its fast depreciation and escalating volatility, some market participants have turned to the USD/CNH futures, premier hedging tool, to protect themselves from potential currency risk. As demand for RMB risk management grows, HKEX’s RMB derivatives products have continued to set several records.

HKEX’s USD/CNH Futures recorded an average daily volume of 8,097 contracts (notional US$810 million) in June, an increase of 173 per cent from 2017. Single-day volumes hit 21,686 contracts (notional US$2.17 billion) and 20,340 contracts (notional US$2.03 billion) on 3 and 4 July, marking fresh all-time records since the product launched in September 2012. The trading took place across all contract months, with the September contract leading the pack. On the same day, both HKEX’s USD/CNH Options and CNH/USD futures trading recorded all-time highs of 909 contracts (notional US$91 million) and 429 contracts (notional RMB 129 million) respectively since they were first introduced in March 2017 and May 2016.

HKEX’s RMB derivatives market is supported by rich liquidity across the short and long-term tenors, reflecting a diversified investor base and their active participation. A growing number of clients, including banks, asset management companies, corporate treasurers and institutional and retail investors are actively managing two-way RMB volatility by using HKEX’s RMB derivatives contracts. HKEX’s RMB derivatives market has developed into a highly liquid market, with the bid-ask spreads in the key contract months having notable advantages over other comparable markets, providing strong liquidity and market depth and offering high capital efficiency to investors.

The number of futures dealers trading RMB futures for customers has also steadily increased, and the number of exchange participants in the market has grown to more than 120, encompassing international, Mainland China and Hong Kong-based brokerage firms. HKEX continues to enhance its product range and has recently introduced the sixth calendar quarter month contract of USD/CNH futures.

The new record highs across HKEX’s RMB derivatives products have underpinned the leading role of Hong Kong as the largest international offshore RMB trading and risk management centre, where its comparative advantages lie in a number of factors including a large pool of RMB, international investor base and an efficient market infrastructure.