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Asian derivatives market prospects 'rosy', CME head says

(China Daily/Agencies)
Updated: 2009-10-09 08:15

CME Group Inc, the world's largest futures exchange, predicts "great growth" in Asian derivatives as the economy expands, Executive Chairman Terry Duffy said.

"That's one of the reasons I'm here," Duffy said in an interview in Hong Kong yesterday. "We're making certain that the CME continues to expand its business outside the US. We need to get involved."

CME Group said last month it would buy a 25 percent stake in Bursa Malaysia Bhd's derivatives unit and license its palm oil settlement prices to tap hedging demand for the world's most-traded vegetable oil. Developing Asian economies will grow 6.2 percent this year and 7.3 percent in 2010, according to International Monetary Fund forecasts.

Duffy didn't specify which countries or markets the group was looking at for further growth. Derivatives, such as futures or options, are used to hedge risks or speculate on assets.

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"Appetite for risk management is something that I was quite surprised how big it is and people need to manage their risks," Duffy said at a briefing in Singapore. "Asian business produces so much for the world versus what they've produced 10 years ago. I'm very excited with the opportunity the CME has here."

The expected growth rate for developing Asian countries compares with a 3.4 percent contraction in 2009 in advanced economies before expansion of 1.3 percent in 2010, according to the IMF forecasts.

Nymex Holdings Inc shareholders in August last year approved a takeover offer from Chicago-based CME, helping cement the group's position as the world's top derivatives exchange.

"Our strategy is to continue to grow," Duffy said at the briefing. "Asia is the place for the CME to expand its businesses dramatically. We could add a lot of value. Regulators that I've been meeting with have been very receptive to our business model."