Hong Kong Exchanges and Clearing Limited aims to explore creating a spot commodity trading and financing platform in China, said Charles Li, chief executive of HKEx, the parent company of London Metal Exchange, on Thursday.
"Actual trading of physical products is the foundation of a commodity exchange," said Li, who was speaking at the HKEx's Strategic Plan 2016-2018 presentation in Hong Kong. "We aim to develop and internationalise China's commodity benchmarks, grounded in the physical market."
According to Li, with the trusted status of HKEx and the unique expertise of the LME in the physical metals market, HKEx anticipates being able to develop credible and internationally relevant onshore benchmarks that are firmly grounded in the physical market.
He added that another way of extending current commodities complex is to build a convenient channel for Asian liquidity to access the LME market and products, as a way to further "financialize" the LME.
According to the HKEx's Strategic Plan for 2016-2018, the exchange targets to list LME products in Hong Kong in various forms in the near future. "In the medium- to long-term, we are undertaking preparatory work for London-Hong Kong Connect, a scheme that connects the LME and Hong Kong Futures Exchange more directly."
The London-Hong Kong Connect trading link, if implemented, would permit HKFE members direct access to LME products.
HKEx completed the acquisition of LME on December 6, 2012.
