Deutsche Bank announced today it is has executed one of the first Chinese Yuan (CNY) FX option trades in China, following the introduction of new rules by the State Administration of Foreign Exchange that allow the trading of FX options between locally-based banks, institutions and corporations from today.
“This historic transaction marks an important step towards deepening China’s FX derivatives market and the liberalization of the foreign exchange system,” said Feng Gao, Head of Markets, China, at Deutsche Bank.
“With CNY volatility expected to increase, FX options provide Chinese corporations and institutions with an additional tool to manage currency risk while introducing a greater level of sophistication in their approach towards risk management,” Mr Gao said.
The transaction references USD/CNY.
The introduction of FX options follows the expansion of the onshore cross currency swap market in February this year. China’s currency is also becoming increasingly global, with a fast-growing offshore Renminbi market in Hong Kong and growing volumes of international trade being settled in CNY.
“The gradual shift towards a more flexible currency framework, allowing greater FX volatility, is an important step towards establishing CNY as a truly global currency. We are committed to using our expertise as the world’s largest FX trading bank to help build a strong and liquid FX options market in China,” said Beng-Hong Lee, Head of FX Trading, China, at Deutsche Bank.
Deutsche Bank is the world’s largest provider of liquidity to global FX markets, having been ranked #1 by Euromoney’s definitive global FX survey for the past six years running. In Asia, Deutsche Bank has a market share of 22.39% according to Euromoney.
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Deutsche Bank is a leading global investment bank with a substantial private clients franchise. Its businesses are mutually reinforcing. A leader in Germany and Europe, the bank is continuously growing in North America, Asia and key emerging markets. With more than 100,000 employees in 74 countries, Deutsche Bank offers unparalleled financial services throughout the world. The bank competes to be the leading global provider of financial solutions, creating lasting value for its clients, shareholders, people and the communities in which it operates.
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