In a bid to expand Hong Kong's commodities trading capability, the Hong Kong Mercantile Exchange (HKMEx) launched on 18 May 2011.
HKMEx languished for more than two years in the pipeline, changing its original vision for a fuel oil trading platform to gold futures, to meet market demand.
It now offers US dollar physically settled gold futures contracts. It is regulated by the Hong Kong Securities and Futures Commission.
HKMEx is steadily building its membership (now at 20) and trading volumes (reported to be an average of 2,297 contracts per day in June, reaching a notional value of US$2.36 billion for the month).
It will compete with the Singapore Mercantile Exchange, existing Hong Kong gold trading platforms (including one provided by Hong Kong Exchanges and Clearing Limited) and other established precious metals platforms further abroad.
HKMEx has already signalled to the market that it plans to introduce silver and RMB-denominated gold products by the end of this year.
With strong investor appetite for 'all things RMB' and anticipated interest from Mainland Chinese investors, this could give HKMEx a regional edge.