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CME in talks to enter China derivatives market


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FW 12/22/11

(Reuters) — CME Group Inc., operator of the world’s leading energy, grains and precious metals markets, is in talks with China’s securities regulator to enter the mainland’s financial dirivatives market , the official China Daily reported on Thursday.

CME President Phupinder Gill told the newspaper that the group was in talks with the China Securities Regulatory Commission (CSRC) about starting a pilot overseas futures trading business that would allow some futures companies from China to buy and sell futures on the Chicago-based international exchange.

CME Group operates the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange.

“Everything is going well so far, and that will be a milestone for CME’s global expansion process,” Gill was quoted as telling the paper.

China closed offshore futures trading 17 years ago because of heavy speculative trade, but Gill was hoping that would change, the report said.

“During the last decade I have seen China’s derivatives markets successfully shake off early challenges. The domestic regulatory institutions and exchanges have improved risk management capacity a lot, which has reached world-class,” he was quoted as saying in the report.

Gill said China’s exchanges in Dalian, Shanghai and Zhengzhou were “very well-managed” and that China’s growth had fuelled the global economy over the past few years.

The firm was also planning to launch a clearing house in Asia and increase the number of employees in the region, the China Daily said.

In October, CME Group said about a fifth of its business came from outside North America and that it aimed to boost that figure, not through acquisitions but by expanding sales of existing products.