China has long been a focal point for US derivatives exchanges that see its financial markets as the next growth frontier. After years of talks and friendly visits, US exchanges are closing significant business deals in China and beginning to tap into its enormous potential.
Virtually every Chicago and New York futures exchange has signed memorandums of understanding (MOUs) with Chinese exchanges, an often non-committal, ceremonial arrangement. But an MOU between Chicago Mercantile Exchange (CME) and China Foreign Exchange Trade System & National Interbank Funding Centre (CFETS) signed in 2004 blossomed into the first major deal between a US exchange and Chinese market in March. The agreement will allow Chinese financial institutions and investors to trade CME forex and Eurodollar contracts electronically. No start date has been announced but it is significant because CFETS, operated by the People’s Bank of China, is the only foreign exchange and interbank money market in China.
