According to reports from the Wall Street Journal, the Chinese yuan may be in line for electronic offshore trading. Banks in the US as well as Europe may be able to trade in the currency, after the completion of negotiations with the vendors behind the new trading platform.
Currently Thomson Reuters and the ICAP PLC are allowing trading in the yuan on their electronic platforms. It is reported that they began trading yuan on the 27th September and have so far dealt with several trades that average around $2 million each, every day.
The platform they are using supports trade between foreign banks and Chinese banks located in Hong Kong, however it may soon be expanded to support offshore international trades, which would mark another small leap towards the currency being traded on the global market.
Talks are still underway between European and US banks about using the system, although there are currently no leads as to which banks are involved in the dialogue.
The previous method of trading the Chinese currency has been between Hong Kong banks, which used brokers or over-the-counter services. Electronic trading would necessitate the provision of volume data and open pricing, which is a key part of increasing the transparency of the currency in the international market. It would also connect a larger group of participants in the currency trade.
Hong Kong trading of yuan is expected to grow exponentially in the next couple of years, with the possibility that yuan deposits in Hong Kong could total around a third of all deposits by 2015, according to a note released from Standard Chartered.
