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Low fees in works at new exchange

Hong Kong Mercantile Exchange aims to attract independent traders with less demanding requirements and fees, said chairman Barry Cheung Chun-yuen.

To take advantage of Hong Kong's being an offshore yuan center, the commodity exchange will also launch more yuan-linked and yuan-denominated futures contracts, Cheung said.

"We are charging a trading fee of 50 US cents [HK$3.90], with a clearing fee of 25 US cents," he said, referring to charges for a gold futures contract.

Retail investors can also start trading gold futures with less than HK$20,000.

For example, gold futures cost US$48,000 (HK$374,400) per contract on average. If only 3.3 percent is required as a deposit, only HK$12,355.20 is required to start trading, Cheung said.

But he noted that HKMEx's major clients are likely to be institutional investors. Unlike the New York and Chicago Mercantile exchanges, products on HKMEx are specifically designed for Asian clients.

"Our new platform will offer Asia a bigger say in setting global commodity prices," Cheung said.

HKMEx also plans to launch gold futures priced in yuan, but settled in US dollars.

"Hopefully the gold contracts denominated in yuan will be launched by the end of this year," Cheung said, adding that the exchange aims to offer silver futures priced in US dollar and yuan, as well as futures of commodity-linked indexes.

Trading is set to start on HKMEx on May 18. There will be a 15-hour trading period between 8am and 11pm, overlapping with London and New York.

About HK$500 million was invested to develop the bourse's trading platform, with 100 people hired.

Cheung is the biggest shareholder, while others include ICBC (Asia), COSCO Group, Rusal (0486), and a local businessman in the shipping sector.

The exchange so far has 16 members, including Morgan Stanley, BOCI Securities and MF Global.

Source: http://www.thestandard.com.hk/news_detail.asp?we_cat=2&art_id=110842&sid=32297386&con_type=1&d_str=20110509&fc=10