Member Article

London sees growth in RMB business offering following ‘substantial reform’ in China

London has continued to strengthen its position as a global centre for offshore RMB business, in line with ‘substantial reform’ in China.

Amidst a rising number of global RMB centres in the City, figures from the London market for 2014 show persistent strong growth in RMB forex trading

According to a new report published by the City of London Corporation, major developments over the past year have included, the opening of Shanghai-Hong Kong stock connect, further expansion of RMB clearing banks into a total of 14 offshore RMB hubs and the establishment of the Asian Infrastructure Investment Bank.

The report, which is the latest in the series written by Bourse Consult that tracks growth trends in the UK and reviews the latest developments of the offshore RMB market, also highlights the remaining challenges for the full internationalisation of the currency, i.e. how to achieve full capital account convertibility and raise its profile as a mainstream global currency.

In conjunction with the Chinese authorities’ continued policy drive, London’s RMB business had substantial development.

The report saw particularly strong growth in forex-related businesses in 2014. Overall trading volumes more than doubled in the year up 143% from 2013 figures, with average daily volumes reaching US$61.5 billion, nearly six times as large as those reported in the first survey in 2011.

In spot trading volumes were up more than three times on the 2013 figure, at US$18.4 billion per day and this figure represents 67% of respondents global business (compared to 57% in 2013).

2014 saw total trade finance decline by 17.6% from 2013 figures, due to limited internal quotas in the second half year and Letters of Credit were seen to have become less favour of alternative trading financing products and services.

Reflecting growing interest in a wider range of RMB products as the market becomes more established, trading of dim sum bonds rose from close to zero in 2013, to ¥4.5 billion in 2014.

Total deposits at the end of 2014 were ¥20 billion, considerably much higher than the figure at end 2013 (¥14.6 billion) representing a 37% increase. This includes a significant increase in corporate deposits from ¥3 billion in 2013 to ¥8.2 billion.

Mark Boleat, Policy Chairman at the City of London Corporation, said: “The City of London’s RMB initiative has now entered its fourth year and our latest research strongly indicates the substantial growth of London’s RMB market in both depth and sophistication, with more active market participants. This is not just a UK phenomenon, with the RMB now having joined the top five most-used global currencies the global market is also growing in momentum.”

This was posted in Bdaily's Members' News section by Ellen Forster .