ADS Securities, the biggest foreign-exchange broker in the Middle East, is looking for a partner in China so that it can gain access to the new energy-trading platform in the Shanghai Free Trade Zone, as part of its efforts to expand in Asia.
The Abu Dhabi-based broker is in talks with several institutions in China on forming a partnership able to trade in the Shanghai International Energy Trade Centre, an exchange set up late last month that is aiming to launch a new crude-oil contract.
"We are keeping a very close eye on the opportunities in the Shanghai Free Trade Zone … we are in talks with one or two," said Desmond Yeo, managing director of ADS Securities Hong Kong. "We want to be there when these opportunities arise."
Opportunities that could be seen soon in the pilot zone included commodity futures contracts denominated in yuan, and Fortune 100 corporate yuan bonds, he said.
The Shanghai Futures Exchange (SFE) is looking to launch a long-awaited crude-oil futures contract that would be traded in the new centre it has established in the pilot free-trade zone.
No details have been revealed, but officials have said the contract, aimed at creating a benchmark for Asia, might be priced in yuan.
The SFE is also considering the launch of other products, such as liquefied-petroleum-gas and natural-gas futures.
ADS, which opened an office in Hong Kong a month ago, is looking to hire 30 staff in the city next year to make it a regional hub in Asia, as it gears up in the yuan foreign-exchange and commodities trading markets.
It has 10 staff in Hong Kong at present and also has a back office in Singapore.
"If you are wondering why we are here in Hong Kong, not somewhere else in Asia, it's simply because our aim is China," Yeo said.
"It is a very important market for us because of the CNH [offshore yuan] market, the liberalisation of the yuan."
The company started operations in March 2011 and offers pricing on bid and offer spreads across all major currency pairs.
It recently introduced US dollar-CNH futures and said more products in the foreign exchange market related to yuan would be offered in future, such as euro-CNH and some synthetic exchange-traded products.
The company recently received a type three licence from the Hong Kong regulator, allowing it to trade leveraged foreign exchange and bullion. Yeo said it would also apply for other licences so that it could participate in the wealth-management business in the city.
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