HKEx takes top position from CME
By Jeremy Grant
Published: July 30 2009 17:44 | Last updated: July 30 2009 17:44
Hong Kong Exchanges and Clearing has toppled CME Group, the US futures exchange, from its position as the world’s largest exchange by the company’s own market capitalisation.
The development underscores how exchanges outside the biggest financial centres are benefiting as those in more mature markets grapple with the new regulatory agenda being pushed by the Obama administration.
Exchanges such as CME and ICE in the US are building new businesses in response to regulators’ demands that more over-the-counter derivatives be cleared.
However, the issue has become complicated for the CME, which has struggled to get a planned clearing mechanism for OTC credit default swaps off the ground.
The recent rise in the value of HKEx’s own shares has been fuelled by a belief that it is likely to remain a growth exchange amid continuing demand for Chinese company listings.
On Wednesday shares in BBMG, a Chinese construction material maker, rose almost 60 per cent in the first hour of trading on the Hong Kong exchange. The company raised HK$6.8bn ($877m) last week in the territory’s second biggest initial public offering this year.
The Hong Kong exchange’s value as a company on Thursday was $19.7bn, with Chicago-based CME Group at $17.7bn. Third-ranked was Deutsche Börse at $15.4bn.
BM&F Bovespa, the Brazilian exchange, was fourth largest. It has been building its business by closing down its “open outcry” pits and expanding its electronic trading capacity, allowing easier access to its markets for traders outside Brazil.
HKEx’s valuation overtook the CME’s on July 22. However, Herbie Skeete, managing director of Mondo Visione, a UK-based exchanges research company, said the CME would likely regain its crown again once it had “sorted out its local difficulties”.
“There are quite a few uncertainties in derivatives but they should surpass Hong Kong again as their engine of growth returns,” he said.
The launch of a rival futures exchange, ELX, has also weighed slightly on CME sentiment. However analysts do not believe ELX – backed by banks and Getco, an electronic liquidity provider – is likely to make significant inroads on CME’s dominant Treasury bond futures contract.
CME’s euro-dollar interest rate futures contract is expected to benefit from rising inflation expectations.
This week, CME’s profits fell less than analysts had expected in the second quarter, although the effect of deleveraging by the financial sector continued to take its toll on the company. |
