CME Group is set to launch the offshore Renminbi Options contract amid growing demand for USD/CNH in the OTC markets. The expected launch date for the offshore pairing of the US dollar to the Chinese Yen is April 13. However, the listing will be dependent on regulatory approval, which is still pending.
The latest offering of USD/CNH options by CME Group will provide traders with a great alternative to the OTC markets. In fact, these options contracts will hold additional benefits like being a centrally cleared product. Over the past few years, offshore Renminbi options have become one of the most widely traded pairs in the OTC markets.
USD/CNY Options To Launch From April 13
China is currently the second biggest global economy after the United States. The listing of USD/CNH options on CME will provide western investors to gain exposure to the 5th most popular global payment currency.
The major difference between onshore and offshore Renminbi prices is that the People’s Bank of China controls the former. Hence the CNY can only fluctuate within a 2% range of the reference rate. Only Chinese citizens of mainland China have access to the CNY markets.
On the other hand, the offshore Renminbi (CNH) derives its price from the free-floating exchange rate like most global currencies. It is regulated by the Hong Kong Monetary Authority and can be traded in offshore markets by foreign investors.
CME Group Global Head of FX Products
The CME Group senior management announced that the upcoming offering of USD/CNH options would allow the investors to manage risk more properly. The announcement comes at a time when the Chinese economy is reopening and investors are looking for ways to gain exposure.
Offshore Renminbi has become a core part of global FX trading and we’re delighted to offer these options contracts to help clients manage currency risk as China resets its economy during this period of reopening.Paul Houston – Global Head of FX Products
BNP Paribas’s top executive Adrian Averre also expressed excitement about the new listing and termed it a timely addition to the CME Group’s portfolio. CME Group is currently the largest futures exchange in the world. The group controls the Chicago Mercantile Exchange(CME), New York Mercantile Exchange (NYMEX), and Chicago Board of Trade (CBOT). It is a publicly-traded company with a market capitalization of $66.7 billion.