Deutsche first to facilitate CNH e-trading

Deutsche Bank has become the first bank to facilitate offshore renminbi (CNH) trading on an electronic platform.

The firm revealed yesterday that it had added CNH to Autobahn FX. It expects this move to broaden market access to the currency, leading to greater liquidity and improving ease of trading for corporations and institutions.

The most likely users are corporate clients worldwide with offshore renminbi FX requirements, notes Michele Wee, the bank’s head of electronic FX and fixed income sales for Asia.

“CNH is the most significant market development Asia has witnessed in recent years,” she states. “Adding CNH to Autobahn FX provides corporate clients with an easy, efficient means to meet their CNH trading needs.”

Autobahn FX provides access to pricing and liquidity available on the platform. Clients can trade USD/CNH spots for now and forwards and swaps in the future, notes Jens Scharff-Hansen, co-head of FX trading for Asia at Deutsche Bank.

Scharff-Hansen estimates that electronic trading will count for 20% of Deutsche’s total CNH traded volume to start with. Overall, he expects Deutsche’s e-trading platform to account for 75% of the bank’s total global FX trading by 2012.

Daily trading volumes in USD/CNH have grown from almost zero in June 2010 to an equivalent of $600 million of spot transactions and $300 million of swaps on a daily basis, according to Deutsche estimates.

Scharff-Hansen expects the daily spot trading volumes of USD/CNH to exceed $1 billion by the end of the year globally, with the spread between CNY and CNH narrowing as offshore trade settlement volumes grow and the CNH market becomes deeper.

“As with any market, broadening participation is critical for building liquidity and improving market efficiency,” he adds. “We have already seen strong growth in daily trading volumes of CNH, and while these remain small compared with onshore CNY trading volumes, the growth trajectory is very strong.”