Printable View
Interesting what you're talking about swaps and the cost of carrying. But don't forget that in China real rates are managed indirectly, as mentioned by another user: through reserve requirements and not nominal interest rates. That makes arbitration more complex, but also more profitable for those who know how to read BoC's monetary policy. Here it's not about replicating the Western model. It's about understanding how China plays its game.
What bothers me most is the tone of superiority of some comments. What makes you think that you see something that the CME, hedge funds, banks and institutional traders didn�t see? If it were so obvious that this doesn�t work, they wouldn�t be investing resources in its launch. So lower the ego a bit and analyze the fundamentals with more humility.
It is true that contracts about the yuan are not going to be free of manipulation or interference from the BoC, but does that not happen with any other currency? USD/JPY has been influenced by BoJ interventions for years and no one stops operating it. The market is not clean, it is functional. And if you can detect intervention patterns, you can operate them. The key is to adapt your approach, not to demand ideal conditions that do not exist.
The arguments that deny the viability of this contract seem to have come out of 2010. The SDR already has the yuan included, multiple central banks keep it in reserves and the digital yuan is in advanced phase. The world is moving towards a multipolar model, whether you like it or not. And that includes more tools to manage the yuan exposure. This is just the beginning.
I am surprised that no one has mentioned the potential of this contract for companies trading with Asia. Being able to cover themselves directly in CME with a regulated product is a giant step for those who previously could only do it via Hong Kong or Chinese banks. This type of tools are not only for speculative traders. They are useful for CFOs, corporate treasurers and risk managers. As their profits spread, liquidity will arrive alone.
I would like to see what those who said that �nobody would want to touch that contract� say within a year when the average daily volume begins to climb. It is always easy to criticize from ignorance. Yuan is a key piece of the new economic order. Having financial instruments to operate with it is not a fashion, it is a necessity.
That �contracts can be delayed or cancelled� is true... but unlikely if it comes from an entity like the CME. We�re not talking about a second-rate exchange in some tax haven. If something announced the CME with date and specifications, you can be sure it�s all set. Reputation is worth more than any failed experiment.
The problem is not whether or not the yuan should be in international markets. The problem is whether you, as a trader, have the approach to take advantage of it or just stay waiting for external validation. Those who make money are the ones who take the initiative, not the ones who expect the perfect signal. Here�s a new instrument, backed by the most serious derivative infrastructure on the planet. Are you really going to ignore it?
I would love for those who criticize this to show us their history of operations or their backtests. Because thinking from the keyboard is easy, but holding it with numbers is already another story. I�m going to try this contract in demo and paper-trading as soon as it is available. Then we talk with data, not with prejudices.
Some talk about �lack of liquidity� as if it were something static. Liquidity is like trust: it is built. If the CME maintains its momentum and institutionals participate, it will soon become a relevant product. Let�s look forward. Criticizing because something is not perfect from day one is missing the opportunity to be part of its evolution. Isn�t that what every good trader is looking for?