EBS BrokerTec, ICAP Information Services partner for renminbi benchmark

EBS BrokerTec, ICAP’s electronic foreign exchange (FX) and fixed income business has partnered with ICAP Information Services (IIS) to launch the ‘EBS CNH Benchmark’, described as the first fully electronic, trade-backed reference rate for the offshore Chinese renminbi (CNH) market.

Announcing the launch, the two divisions said the benchmark was developed “following considerable interest from a number of major Chinese banks and senior onshore authorities”

Published daily at 16:30 Beijing/08:30 GMT, the benchmark is timed to coincide with the onshore renminbi (CNY) market close. This will allow market participants a direct comparison of CNY and CNH market activity during the increasingly significant Asia Pacific-Europe, the Middle East and Africa (APAC-EMEA) crossover. The benchmark will provide the first transparent reference rate for offshore renminbi (RMB) trading in international markets.

Calculated and distributed by IIS, the EBS benchmark incorporates rates from executed trades during the fixing window from the EBS Market central limit order book. The benchmark uses transparent methodology consistent with the International Organisation of Securities Commissions’ (IOSCO) Principles for Financial Benchmarks, to create a reliable and accurate daily reference rate.

The launch of the benchmark reinforces EBS position as a major over-the-counter (OTC) venue for CNH globally. Currently 70% of all CNH interbank activity is traded on the EBS Market with US dollar (USD)/CNH the third most traded currency pair on the platform.

“The CNH market continues to grow exponentially with more market participants trading USD/CNH than ever before,” said Darryl Hooker, co-head of EBS BrokerTec Markets.

“As a result, there is an industry need for an innovative benchmark which accurately and reliably captures the true reference rate, at the Asia- Europe crossover. Launching a dedicated benchmark for this market, was the logical next step in our CNH offering and we look forward to working with our customers to further develop and realise the full potential of this benchmark.”

Gary Licht, director of local currency markets, ICBC Standard Bank, added: “The continued internationalisation and liberalisation of the RMB will, no doubt, benefit from a reliable and transparent benchmark in the EMEA time zone.

“Such a credible benchmark will, over time, aid CNH product development increasing the effectiveness of hedge instruments available to EMEA based clients. We look forward to monitoring the progress of this initiative as we continue to witness strong CNH interest within Europe and the Americas.”