Hong Kong Exchanges and Clearing Ltd. (HKEx), which operates the city’s stock and futures markets, will create a benchmark index for the yuan to help spur offshore trading of the Chinese currency.
The first-of-its-kind index, which will track the value of the yuan against a basket of currencies, will be launched in partnership with Thomson Reuters, the Wall Street Journal reported.
Charles Li, chief executive of HKEx, was quoted as saying Tuesday that the move is part of efforts to create “a massive trading ecosystem” around the Chinese currency.
The exchange operator hopes the new index, which could be launched in June, will promote trading of some of the currency pairs it plans to start this month on its futures exchange.
The currency pairs include the yuan against the US dollar, euro, Japanese yen and Australian dollar.
“Once we launch the index and with the regulatory approvals, we’ll be launching index futures and options on that index,” Li was quoted as saying.
The idea is that traders will be able to manage the risks around China’s currency more effectively and make money by betting on the currency pairs underpinning the index.
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