Commodities

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Why should HKEX launch commodities products?

Commodities are one of the three core pillars of HKEX’s multi-asset strategy
The launch of commodities products is to promote commodity market in the Asian time zone to reflect Asian supply and demand
It will give customers of HKEX exposure to the commodities sector

What are the benefits of trading these commodities futures contracts on HKFE platform?

It facilitates hedging and arbitrage in the Asian time zone
It gives exposure to a network of over 30 HKFE participants with Mainland backgrounds and their ability to attract Mainland commodity investors
Exposure to liquidity from global financial market players who trade commodities

Who are the target participants?

Physical end users and sector participants looking to hedge their market exposure
Cross-market arbitrageurs
Retail and Financial investors with an appetite to invest in the commodities sector

What are HKEX Gold Futures? What are their characteristics?

Gold Futures are futures contracts based on the precious metal market to help build Hong Kong into a mature, comprehensive capital market that can serve as a risk management centre for both Mainland investors and international participants.
HKEX Gold Futures are designed to help gold end users, like refiners, fabricators, and jewelers, hedge gold price risk, as well as for banks, fund managers and traders to invest in the precious metals market. HKEX's Gold Futures underlying is a 1 kilogram gold bar of at least 0.9999 fineness.
HKEX Gold Futures are quoted in USD and off shore RMB (CNH), and are the first physically delivered commodity futures contract in Hong Kong. The final settlement price is the volume weighted average price of all trades in the expiring Contract Month during the last thirty minutes of trading on the Last Trading Day.
For more information, investors can refer to "Gold Futures" under"Products - Listed Derivatives - Commodities"on the HKEX website.

What are HKEX Iron Ore Futures? What are their characteristics?

Iron Ore Futures are futures contracts based on seaborne iron ore that is the raw material for steel making. HKEX’s iron ore futures underlying is the seaborne TSI index 62% Fe CFR China, which is a medium-high grade iron ore.
HKEX Iron Ore Futures contracts are designed to provide a way for financial and physical investors to hedge their iron ore price exposure and invest in the commodity.
HKEX Iron Ore Futures contract is quoted in USD, cash settled and the final settlement price is based on the arithmetic average of all TSI index 62% Fe CFR China index values published in that contract month. The last trading day is the last Hong Kong business day of a calendar month that is not a Singapore public holiday. Both monthly and quarterly contracts are provided in HKEX to enhance exposure.
For more information, investors can refer to "Gold Futures" under"Products - Listed Derivatives - Commodities"on the HKEX website.

What are HKEX London Metal Mini Futures? What are their characteristics?

London Metal Mini Futures are based on six base metals (Copper, Aluminum, Zinc, Nickel, Tin and Lead) on the London Metal Exchange, the world premier industrial metals trading exchange.
HKEX London Metal Mini Futures offers Asia time zone trading facilities and are designed to give the market another channel to hedge against adverse price movements. HKEX aims to develop commodities trading in Hong Kong in cooperation with LME, to bring together both the physical and financial communities.
HKEX London Metal Mini Futures are quoted in USD and off-shore RMB (CNH), cash settled and are a smaller size than the LME contracts. The final settlement price is based on the LME’s Official Settlement Price which is established during the 2^nd Ring Close
For more information, investors can refer to "London Metal Mini Futures" under "Products & Services - Derivatives Products" on the HKEX website.

How will the block trade facility work?

HKATS’s Block Trade Facility allows participants to execute a large-sized order with price and execution certainty; and reduction of counter-party risk through central clearing.
The minimum block trade volume threshold for commodities are as follows:

London Metal Mini Futures (USD and CNH): 50 contracts
Gold Futures (USD and CNH): 30 contracts
Iron Ore Futures: 50 contracts

Criteria for Block Trades, Information Dissemination, Clearing Arrangements and Market Surveillance can be found
https://www.hkex.com.hk/Services/Trading/Derivatives/Overview/Trading-Mechanism/Block-Trade-Facility?sc_lang=en

What is TMA pricing?

TMA is Hong Kong’s Treasury Markets Association
The pricing is the benchmark of the spot USD/CNH rates in Hong Kong published at 11:15 am each business day
The pricing is determined by averaging the middle quotes after excluding the highest 3 quotes and lowest 3 quotes from the 18 contributing banks (subject to changes by TMA from time to time)

Please note the following disclaimers and copyright notice regarding information provided on the Treasury Markets Association's website

While the Treasury Markets Association (TMA) will make all reasonable efforts to ensure a continuous, accurate and timely service, the TMA and other data providers make no warranties, representations or undertakings, expressed or implied by law or otherwise, in relation to the price fixings and reference rates and are not responsible for any errors or omissions, or losses caused by disruptions in the service or late publication of the daily rates or inaccuracy of the daily rates or otherwise arising from the use of or reliance on the price fixings and reference rates.

What is the margin call arrangement for the new products?

Please refer to the HKEX website
( https://www.hkex.com.hk/Services/Clearing/Listed-Derivatives/Risk-Management/Margin/Margin-Tables?sc_lang=en ) for the existing margin call arrangement which is also applicable for the LME Mini Futures contracts

What is the margin level of these products?

The latest margin levels for the Commodity Futures contracts can be found at

https://www.hkex.com.hk/Services/Clearing/Listed-Derivatives/Risk-Management/Margin/Margin-Tables?sc_lang=en