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Icap Completes First Cross-Region CNH Trade on EBS

Icap has executed the first cross-region Chinese yuan (CNH) trade on its EBS platform, marking a further development in the internationalisation of the Chinese currency.

“The Bank of China is proud to have transacted the first cross border CNH deal in London through EBS, as it looks to develop its range of Chinese related products,” Bob Hyman, head of FX trading at Bank of China in London said in a statement.

The move follows China’s relaxation of currency rules as part of a drive to increase the international use of the yuan. In July China said it would allow firms to buy or sell yuan in Hong Kong freely without limits. As a result financial institutions are able to offer a wider range of yuan-denominated products in the offshore centre.

Icap launched the USD/CNH tradable currency pair on its EBS platform on 27 September followed by three tradable pairs earlier this month: EUR/CNH, JPY/CNH and HKD/CNH.

All CNH trades are to be settled in Hong Kong and banks looking to trade the pairs must have a pre-arranged clearing and settlement arrangement with a Hong Kong authorised institution.

While volumes of Hong Kong cleared yuan are relatively low, industry observers believe trading will grow considerably over the coming months as the entry of companies such as Icap and rival Thomson Reuters offering offshore yuan trading on their matching platforms enhances market accessibility.

Jeff Ward, head of Icap Electronic Broking in Asia says: “EBS is delighted to have facilitated this London-Hong Kong CNH trade. It confirms the growing interest cross regionally in CNH, an interest that we expect to see grow over the coming months as both global and regional banks and their customers choose to transact business using Hong Kong cleared renminbi.”?

Icap also announced last week that it had executed the first ever voice brokered CNH swaption trade between HSBC and BNP Paribas..

Gordon French, head of global markets, Asia Pacific at HSBC, says, “It is very promising to see another RMB derivative product to be settled in RMB in Hong Kong. Last month, HSBC traded the first offshore RMB deliverable SHIBOR interest rate swap.”

“BNP Paribas is very pleased to have closed this landmark CNH swaption deal,” adds Pierre Themiot, head of interest rates and LTFX options trading, Asia ex-Japan, BNP Paribas. “This first option trade is a reflection of our ambitions to grow our RMB product offerings for the benefit of our clients.”

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