More and more corporate deals are expected to take place between London and Chinese firms, which will in turn, enable financial professionals to trade and hedge on the Chinese renminbi.
It was announced in 2014 that London was the first venue for trading renminbi in Europe and the deal between the Chicago Mercantile Exchange (CME) and the China Construction Bank (CCB) is the first of many partnerships, the Telegraph reports.
Head of international at CME, William Knottenbelt, believes that being able to transact during London hours is significant. “The ability to transact during London hours is of paramount importance to those institutions who value flexibility in managing their positions in markets where prices can move sharply in short periods of time,” Knottenbelt said.
After being deemed as “freely usable”, the International Monetary Fund will decide whether or not to give the currency special drawing rights – the yuan would then become a global reserve currency.
The Telegraph also said that the CCB became the first clearing bank for renminbi in Europe and Bank of China’s branches in Frankfurt and Paris were approved shortly after. 6 billion yuan transactions were made per day last year through CCB UK and according to the City of London, London markets hosted $61.5 billion worth of renminbi trading per day in 2014.
However, a London summit on the industry’s introduction of the technology cautions that testing and acceptance are still at an early stage and firms should proceed with caution.
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