LME Consider Renminbi As A Cash Collateral.

Trevor Spanner, chief executive of the London Clearing House (LME) clearing house, said that the LME clearing house will begin to consider the Chinese renminbi as a cash collateral from Monday (September 22nd), which was first implemented in November.

LME is the largest metal exchange in the world.

He said that after talks with members, LME is talking to the Bank of England and is confident that it can get regulatory approval.

At present, the LME clearing house accepts USD, sterling, euro and yen.

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After being bought by Hongkong trading and clearing house in 2012 for $2 billion 200 million, LME is seeking to expand its Asian market and boost Asian trading growth.

Britain is the first European country to be authorized to directly trade RMB, while China is the largest consumer of industrial metals.

Spanner says,

It is natural for LME members to use their local currency.

At present, LME is waiting for the approval of regulatory authorities. If approved, it will increase the RMB denominated contract, and LME has formed an alliance with China Construction Bank this month to develop new products and services.

In its September 22nd statement, it said it would focus on increasing more trading and over-the-counter contracts, expanding the coverage of Asian trading hours and accepting LME warrants as collateral.

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In recent years, the offshore RMB capital pool in Hongkong, China has gained considerable growth, and its deposit size is nearly 1 trillion. Chen Shuang believes that Hongkong, as a major offshore RMB market, has pricing power, thus affecting other offshore markets around the world. Its current market liquidity is fully supported by the two-way flow and payment of Hong Kong and Shanghai issues.

"Liquidity is a technical problem in the past and in the future. The Hongkong monetary authority has been paying more attention to providing liquidity to banks. Now we need to reform or strengthen cooperation with the people's Bank of China in order to supplement the need for liquidity in the market."

As Shanghai and Hong Kong through the current various threshold and paction size control, for the exchange rate risk, Chen Shuang expressed no concern.

"China's economic structure itself is facing pformation, capital is fully open or a large amount of capital flows out, so it is appropriate for China to adopt quota management at this stage.

At the same time, the Fed's interest rate increase has made the US dollar appreciation trend irresistible. In my view, under the current export situation, it is very good for the RMB to maintain a stable two-way fluctuation.

It is worth noting that during the recent period when the US dollar surged against most currencies, the renminbi seemed to "stay out of the country".

Since May, the renminbi has appreciated 1.9% against the US dollar spot exchange rate.

"This does not mean that the renminbi is stronger than the US dollar," Chen Shuang pointed out. "The appreciation of the renminbi now is a natural callback after the sharp fall in the beginning of the year. In a sense, it is only part of the two-way fluctuation of the exchange rate.

There is no sign of improvement in China's exports for a long time. The long-term trend of RMB appreciation is not there.

At the same time, Chen Shuang stressed that the two-way flow of capital and the outflow of foreign investment outflows the introduction of funds. I believe this trend is a long-term trend and the volume will be very large.

The export of the renminbi is also a release for the long-standing inflation problem in the domestic market.

In addition, in solving the problem of RMB reflux in offshore markets, Chen Shuang believes that not only the government needs to be promoted, but also the industry should sing some Renminbi products, including Hong Kong, Shanghai and Hong Kong, and Renminbi bonds, so as to increase renminbi investment opportunities.