CME Group and China Foreign Exchange Trade System, a sub-institution of the People’s Bank of China, announced on Sept. 25 an agreement to cooperate and explore ways “to promote each other’s market infrastructure and products.”
Under the agreement, CME and CFETS have committed to participate in the joint development and innovation of offshore RMB products. Both parties have also committed to greater connectivity in product distribution, with CME facilitating its customers to trade China interbank products and CFETS facilitating China interbank market participants to trade CME’s products.
“We are pleased to sign this agreement with CFETS and strengthen our close working relationship,” said Terry Duffy, CME’s executive chairman and president. “This innovative agreement should increase distribution of our respective products and provide enhanced opportunities to users of our markets.”
CFETS is the country’s main platform for interbank trading of foreign exchange, bonds and other financial instruments. It also publishes a number of pricing benchmarks, including the central parity rate of RMB, the Shanghai Interbank Offered Rate, the Loan Prime Rate and repo fixing rates. Its customers include more than 2,600 legal entities and more than 8,100 trading accounts. In 2014, its total trading volume was over 360 trillion RMB ($56.5 trillion).
Pei Chuanzhi, president of CFETS, commented that the agreement with CME will create mutual benefits in several areas: “The cooperation will promote the connectivity and mutual opening up of both countries’ financial markets, further meet the demands of market participants for hedging against the risks of interest and foreign exchange rates, advance bilateral trade and economic development and allow the financial markets to provide better support to the real economy.”
