Ban may delay foreign futures exchange

A ban on setting up delivery terminals in mainland China by foreign futures exchanges, announced by the China Securities Regulatory Commission, could delay the planned launch of fuel oil futures contracts by the Hong Kong Mercantile Exchange (HKMEx), industry sources said. The directive could force foreign exchanges such as the London Metal Exchange and HKMEx to postpone plans to set up delivery terminals in China. The newly set up HKMEx originally expected to use Titan Petrochemicals’ three bonded storages in south China’s Huangpu as physical delivery terminals. Although labeled “physical” delivery terminals, the exchange would not be allowed to make deliveries to them once it launched the futures contract.HKMEx originally hoped to attract fuel oil traders from mainland China to trade over its platform, and it aimed to first launch the U.S. dollar-denominated fuel oil contract for physical delivery in China. (September 8, 2008)