HSBC launches new interbank offshore RMB currency crosses

Monday, 28 May 2012 00:03 - - {{hitsCtrl.values.hits}}

HSBC has rolled out six new currency trading pairs tied to the offshore RMB. HSBC is now providing a continuous 24-hour streaming of rates through its single dealer platform, proprietary API1 as well as supporting the global inter-dealer primary venues.

This will be the first time that rates will be continuously streamed on an interbank platform for direct offshore RMB (CNH) crosses, other than the USD/CNH trading pair.

HSBC has purposely selected two currency pairs for three key regions: Asia, Europe and the Americas. HSBC’s new offshore RMB currency pairs comprise the following:

EUR/CNH (Euro)

GBP/CNH (British pound)

CNH/HKD (Hong Kong dollar)

SGD/CNH (Singapore dollar)

CAD/CNH (Canadian dollar)

CNH/MXN (Mexican peso)

This is in addition to the Group’s already existing USD/CNH capabilities. Other CNH crosses will be added in time.

Frederic Boillereau, HSBC’s Global Head of FX and Commodities, said: “HSBC continues to lead from the front in innovation for offshore RMB products and services. No other bank currently offers CNH crosses on an interbank basis, a feature we believe will be pivotal to facilitating market liquidity. As one of the largest global FX market participants and a key player in the CNH space, we have a responsibility to our clients to take the lead in developing a benchmark and market for direct CNH crosses.”

HSBC Hong Kong CEO Anita Fung added, “With China standing as the world’s largest exporting nation, demand for RMB has risen substantially. As a result, global payments transacted in RMB have risen at a faster pace than that of total payment transactions worldwide. The development of additional offshore RMB trading pairs to support payment settlement and hedging needs globally will be fundamental to the continued internationalisation of the RMB and will further reinforce Hong Kong’s status as the leading offshore RMB hub globally.”

While the USD/CNH currency pair has been a common feature in the FX markets, direct crosses in other currencies linked to the RMB have been virtually non-existent, other than through bilateral trades. These bilateral trades are often accompanied by a two-fold process – e.g. to undertake a EUR/CNH transaction, a EUR/USD trade will need to take place first then followed by a USD/CNH deal. HSBC’s direct CNH crosses avoid the necessity to cross two bids and offers, thereby reducing the transaction costs for HSBC clients. HSBC has consistently championed offshore RMB developments, leading on initiatives to support the growth of the CNH market. HSBC became the first bank to publish offshore RMB trade finance standard rates in 2010 and was the first foreign bank to provide interbank RMB bond clearing and custody services in mainland China. In addition to leading on dim sum bond underwriting in Hong Kong, the Group has also led on the world’s first international RMB bond out of London. HSBC also has the largest RMB trade settlement network of any bank, with capabilities in 59 markets across six continents.