Another Nail In The Dollar's Coffin: CME Launching Renminbi Futures On August 22

Tyler Durden's picture

Remember when the dollar reigned supreme, and nobody cared about that joke of a currency, the Chinese Renminbi? Neither do we. And neither does the CME, which just announced it is launching USD/CNY futures, which will be available in standard and E-micro sizes beginning August 22. Put otherwise, with one fell swoop the CME will now allow one to transform liability risk, credit and maturity of underlying assets from one currency to another, while on margin (granted, exposed to the same margin shenanigans that make silver bulls scream blood murder every time the CME's name is mentioned). And the CME is just the beginning of what soon will allow everyone to denominate their liability exposure into the Chinese currency. In the process, the dollar lost yet another battle, as it continues to lose the war.

From the CME:

The Chinese renminbi – or RMB – has experienced rapid growth in deposit and trading volume both on- and off-shore. The renminbi is now being used for business transactions in multiple off-shore locations which include Hong Kong, Singapore, Korea, Australia and other areas around the world. Accordingly, a need for capital risk management tools for the Chinese currency has emerged.

To address this need, CME Group has developed USD/RMB futures. These contracts will be offered in standard and E-micro sizes and will be quoted in conventional interbank FX market terms.

    Standard contracts: Based on USD 100,000
    E-micro contracts: 1/10 the standard contract size, based on USD 10,000

Key features:

  •     Cash-settled to the spot value of the interbank convention, RMB per USD, as published by the People's Bank of China (PBC)
  •     Daily pays and collects calculated in RMB, then translated into USDs
  •     Renminbi rate is displayed on Reuters SAEC page
  •     Available alongside the CME's existing RMB/USD contract quoted in the American convention

Full contract details:

Contract Specifications: Standard and E-micro USD/RMB Futures**
Contract Size Standard Futures based on 100,000 USD (≈ RMB 648,300);
E-micro Futures

based on 10,000 USD (≈ RMB 64,830)
Tick Size Standard Contract:
Outrights quoted in 0.0010 RMB per USD = 100 RMB (≈ USD $15.42) per
contract; calendar spreads quoted in 0.0005 RMB per USD = 50 RMB (≈ USD
$7.71) per contract
E-micro Contract: Outrights quoted in 0.0010 RMB per USD = 10 RMB (≈ USD $1.54) per contract
RMB-Denominated Daily pays and collects calculated in RMB but translated into USD by reference to daily PBC fixing rate, and banked in USD
CME Globex Trading Hours Sundays through Fridays:
5:00 p.m.-4:00 p.m. (Central Time, CT) the next day. On Friday CME
Globex platform closes at 4:00 p.m. and reopens Sunday at 5:00 p.m.
CME ClearPort Trading Hours Sundays through Fridays:
6:00 p.m. – 5:15 p.m. (5:00 p.m. – 4:15 p.m. Chicago Time/CT) with a
45–minute break each day beginning at 5:15 p.m. (4:15 p.m. CT)
Months Standard: 13 consecutive
calendar months (Jan, Feb, Mar, Apr, May, Jun, Jul, Aug, Sep, Oct, Nov,
Dec) plus 8 March quarterly months (3-year maturity range)


12 consecutive calendar months (Jan, Feb, Mar, Apr, May, Jun, Jul, Aug, Sep, Oct, Nov, Dec)

Last Trading Day Trading ceases at 9:00 am Beijing time on 1st Beijing business day immediately preceding 3rd Wednesday of contract month
NDF-Style Cash Settlement Final Settlement Price (FSP) at "Chinese
renminbi per U.S. dollar" fixing rate published by PBC at 9:15 am
Beijing time on Reuters SAEC page opposite "USDCNY="
Strike Prices NA
Exercise/Assignment NA
Position Limits / Position Accountability USD/RMB futures converted to notional
equivalents of 6,000 CME full-sized RMB/USD futures contracts (=6
billion RMB) for Position Accountability trigger level; and no more than
2,000 full-sized RMB/USD futures contracts (=2 billion RMB) for
Position Limit in the spot month on or after the day one week prior to
the termination of trading day.**

Positions for the same account holder will be aggregated
across standard-sized and E-micros futures with 10 E-micros equaling 1
standard-sized contract.

**For example, if the appropriate RMB per USD rate is 6.4830
RMB per USD ("prior day's Regular Trading Hours settlement") , then one
100,000 USD standard futures contract would count as 648,300 RMB
against the PA trigger level of 6 billion RMB. Similarly, one 10,000
USD E-micro futures contract would count as 64,830 RMB against the 2
billion RMB Spot Position Limit.

CME Globex Codes Standard: CNY

Block Trade Eligibility and Minimum Standard: Yes. Minimum Quantity: 50

Not eligible for block trades.
EFRP Eligibility Yes
Exchange Rule These contracts are listed with, and subject to, the rules and regulations of CME.
*Note that this process implies the
possibility that the cumulative USD denominated pays and collects may
not sum to zero even where trade is "scratched." I.e., a customer may
buy (sell) and subsequently sell (buy) a contract at the same price
quoted in terms of RMB per USD. However, contingent upon the path taken
by exchange rates while the trade is open, these USD denominated cash
flows, in total, may diverge somewhat from zero.

**Options on USD/RMB (CNY) futures contracts will be offered for trading at a later date.

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66Sexy's picture

A bit dramatic, isn't it?

Tyler said it himself: The chinese economy cannot sustain itself without exporting to western corporations.

IMO the chinese cant afford their own produciton when compared to corporate american buying power like WallMart: They pay more than we do for their own production. Vegetables dishes are cheaper, though... and BBQ lamb. Everything is imported.. and costs more. Chinese consumers prefer foriegn goods anyway, and look down on domestic produced goods, like clothes.

Forget Chinese domestic consumption w/o credit expansion and wage growth. Chinese wage growth would create social unrest and kill american corporate outsourcing, thereby killing their exports. They dont have consumer credit cards either, just debit.. another example of China being a free'er society than the US.

Europeans don't buy chinese crap; they actually have some degree of taste, and are not totally exploited by outsourcing and credit expansionism. Yes, they are skinny, and ride trains to work... so what?

The Yuan is dead money; and probably just as vulnerable as the dollar... until the Chinese finally wise up and introduce a silver backed currency to rally 95% of the worlds production and consumer base... and absolutely betray the financial elite; who obviously have some agreement with the top tiers of Chinese government.

SilverIsKing's picture

I just like saying, "Yuan Bitchez."

Max Fischer's picture

A bit dramatic, isn't it?

That's an understatement.  To imply that the USD is under threat from the CNY because the CME is going to start trading CNY futures is very misleading.  

Total trading in renminbi futures was ~20B per day in 2010. For a little perspective, there are ~$22T in gross notional Euro derivatives outstanding and ~$48T in gross notional USD derivatives outstanding. There's even ~240B in Danish Krone derivatives out there. 

If you're having cocktails at Dorsia on Friday night with Bateman, Halberstam, Allen and (dreadfully) Carruthers, and the conversation turns to growth in currency trading, make sure you mention the RUB and BRL, which are up 350% and 450% YoY respectively.

_ Max Fischer, Civis Mundi   


66Sexy's picture

With the occasional chime from Bateman: "I wonder what she'd look like without a head"

ratso's picture

Right you are Max. The problems in the Chinese economy will be showing up in force over the next 18 months.  Hard landing coming for the Chinese.

bigwavedave's picture

to be settled in USD.... move on

Cognitive Dissonance's picture

Are we (the USA) gonna make it until August 22?

In one piece that is.

Infinite QE's picture

I'd be surprised if we get past July 22nd!

66Sexy's picture

the site is dragging ass tonight... i think its the citibank advertisment banner.

bigwavedave's picture

im from 1966 and still sexy... and one of my best (dead) friends just loved that phrase... Draggin' Ass. Priceless

Vint Slugs's picture

Sure,  we will make it to Aug 22 and beyond.  The USA is a huge, and largely homogenous, socio-political construct.  The idea of its disintegrating in a short, finite timeframe is just not probable.  Look at Greece as an example:  as bad as the situation there has been during the past several months, the country stands.  Comparatively, the USA is a bastion of socio-political stability.  Everything's going to be just fine for now.  Maybe years down the road some other scenario will transpire.

Time to take a deep breath, read the kids a nice goodnight story,  then repair to the company of the faithful wife (and if you're lucky, dog).

Solid's picture

Round eye in big trouble.

j0nx's picture

I got your round eye right here ---> (_o_)

HungrySeagull's picture

Paper is dead, All hail the HFT Silver.

caerus's picture

1.  Fly, Drive, Crawl to NYC branch of the BoC

2.  Open a checking account and convert as much $ as they will allow into renminbi

3.  Sit back and enjoy watching the (as Gibbon so eloquently put it) decline and fall of western civilization

sic sorry i meant the roman empire...he he


bakken's picture

Why would anyone exchange US fiat for an even more shaky fiat currency.  If you were serious you would be in PM.  The Chinese will be.

TruthInSunshine's picture

I am no fan of our governmental policies or the even more absurd/criminal policies of the private Federal Reserve (if I had the legal and political power, I'd revoke its charter, and compel the DOJ to launch an aggressive criminal investigation into all Federal Reserve Bank members & activities), but I'll be the possibly LONE contrarian here who sees a big USD rally coming for a longer than thought previously possible/likely time frame.

With what's coming down the pike on the global scene, the ability to project military power, where the U.S. already has a massive advantage with bases in highly strategic locations, will prove far more potent and timely than many here believe.

I will go one step further and argue the Chinese economy will falter worse than that of the U.S., and that the Chinese currency will falter badly, over the next decade.

Relative to all currencies, gold will shine, if only by besting some real dogs, however.

HungrySeagull's picture

The real dogs you speak of are only now catching and ripping the junkyard midnight shoppers to peices halfway to the outer fence.

oldman's picture

Truth is.

That military option is all that is left.

Truth is.

This country knows no other way.

Truth is.

And they have fogotten how long it has been since the US of A won a war.

 Truth is.

not a thing to do                    




TruthInSunshine's picture

Truth is that the military option has divined the economic order of the globe since man's earliest history.

It's an uncomfortable but undeniable truth.

I am no polly on the state of the U.S. Economy (nor the equally as bad or worse state of the Eurozone, Chinese or Japanese economies), but I am also of the belief that many adversaries or aspiring adversaries to U.S. Hegemony underestimate (rather than overestimate, as is oft stated in the case in the media) the truly horrific destructive and horrific weapons exclusively owned by the U.S. Government.

If shows of military force were a poker game, the U.S. has no discernable tell even as it holds a royal flush. The U.S. soft sells its true military capabilities.

I say this without emotional sentiment.

oldman's picture

Truth is.

This old man agrees with you and also, 'without emotional sentiment'.

Thanks for the post, Truth In Sunshine.

TruthInSunshine's picture

Likewise, om.

It'd be nice to see military supremacy be used, long term, for righteous causes.

I'm not sure how often that's been the case over the course of human history, but sadly, I believe any such periods where it's been used so have been the exception, rather than the rule.

Forget righteous causes - I'd settle for ones that aren't tantamount to the intentional infliction of economic & human suffering.

HungrySeagull's picture

When 9-11 happened that week was reported that the Populations of Iran, Afghanistan, Iraq and Syria were all migrating any way they can to get the fuck out of Dodge.

Human suffering did continue as some gathered near the Turkish Border, the USSR Borders and so on.

We did not care because we were coming, someone is going to get hit and bringing Hell with us on the way.

The Civilians knew. So they choke the roads.

oldman's picture


Remember when the dollar was worthless in 1980-1983 or so?

And everyone thought it was trickle down/ high interest rates that strengthened it.

I always had a third reason that it became strong again----the US military attacked that superpower known as Grenada during that time----flexed its military might and actually won a war(?).

I don't want to see this shit come down, so I hope my return to see the show is wasted money, but who can say a word about these things?

Life is too short for it not to be interesting

and this is VERY interesting, I must say.

Peter_Griffin's picture

I was reading this last week that the US has developed a drone that can bomb anywhere in the world in four minutes, or some really small amount of time.  Same day, read the US government is trying to challenge that drone bombing is an act of policing rather than an act of war....  We have came to strange times that I do not like.

oldman's picture


There is nothing 'personal' for the universe---let go of prefernces and just hang out here with the rest of us do-nothingers, droning on and on and on

Let' s have some fun---the party's nearly over.

doggings's picture

I was reading this last week that the US has developed a drone that can bomb anywhere in the world in four minutes, or some really small amount of time.  Same day, read the US government is trying to challenge that drone bombing is an act of policing rather than an act of war....  We have came to strange times that I do not like.

this is only going to get worse, believe.

bigwavedave's picture

the fight went asymetric during vietnam. thats why the yanks lost. 


right now the export of inflation to china is an act of war by the FED and by design. weapons have changed. spending $1 million to kill an islamic 14 year old just wont work. get a grip and get with the program. 'the enemy of my creditor is my friend'

Raymond Reason's picture

Yeah they won't hesitate to bomb the world into oblivion.  When they can no longer prop up the dollar, these people....the Fed, the Treasury, the ESF, or whoever the hell is controlling everything will fear for their lives and will stop at nothing.  God help us. 

I hope they go quietly like Madoff, but doubt it.   They're the masters of the universe.    

bakken's picture

Long Term, Long USD. Yes.  China will not make it and really where will money go?  The Euro?

The point is:  China is really short water.  Really.  As the country experiences larger and more severe droughts, $2 trillion in the Bank won't be able to build enough infrastructure to save them.

Millions of people on the move in front of Northern droughts and desertification will cause upheaval in China worse than after WWII>>>>A Galactic Sized Mega Chinese Cluster-F*ck. 2018-2021?  It is hard to gloat over this since a huge number of people will die there.

#1 what?  A disaster that will make Africe look like Disneyland.

We may be broke in the USA, but in terms of water and space  we are fantastically wealthy.

TruthInSunshine's picture

I don't know why anyone would junk you, even if they legitimately disagree with you, rather than provide a rebuttal to your statements.

China's monumentous obstacle is a global economy that can increase far more "stuff" with incredibly fewer people doing the work, and this is a trend that will only accelerate as technology accelerates - and that means big problems for China in terms of keeping a massive number of young people in gainful employment.

China's problem is demographically explosive, to say the least.

It took over a 100 man-hours of units of labor to produce a car in the early 1900s. It now takes as few as 12. Most of us will see that 12 halved in our lifetimes, and that's not considering the new, modular types of production now under development, which will come close to eliminating human inputs in the manufacturing and assembly process.

bigwavedave's picture

the situation is thus. the yanks already have too much of everything they need. fat assed welfare mingers are the 'tell'. the chinese still have fuck all (as a group). the time for a full court press is now. that is the evil that is kissenger. we are on a full court press, playing defence yes. but playing for the low point scoring win. bust china and win the game. people say this is the chinese century. they are wrong. they will never get to buy the crap they make. 

qussl3's picture

The Chinese will solve it....

By damming the source of the Mekong and Ganges.

Indochina and India are the ones that are fooked.

fiftybagger's picture

"I will go one step further and argue the Chinese economy will falter worse than that of the U.S."


Yeah.  Remember 2008?  "Now that the U.S. is in recession, those Chinamen are going down for sure".  Right.  Even a stopped clock is right twice a day.  You clowns have been wrong twenty years running.


You may find it more profitable if you learned how to read a chart:

caerus's picture

Yes, you're making a wise call on the race to the bottom...euro prob first...but in the end its going to zero...

caerus's picture

its ALL going to zero...

bigwavedave's picture

i dont think it will be the euro first. i think it will end with the big dollar rally. there are smart people at the top. they let the game go on this long. they are not going to lose it by making it easy. china will pop first. it will be agreed in DC and Brussels to sacrifice the chinese. they will be left holding paper with 1 billion mouths to feed. 

mt paul's picture

might be time 

to move to kashgar

get a donkey cart

grow melons.. 

enjoy the dry breezes 

off the Taklimakan desert...

Manthong's picture

Silver in Chinese is "yin”. The word for bank in Chinese is “yin hang” (silver house).

Renminbi is "peoples currency" in the PRC and in traditional Chinese is “pinyin”.

So… Yin Bitchez ???

HungrySeagull's picture

If China Silver House is only standing Metal Exhange in this world, they can say Panda Coin 10,000, ASE 0.10

CME is turncoat turning into the Benedict Arnold of our time.

Sudden Debt's picture

Rubber in Chinese is "Condom".

It also means: "No strings attached"...

and that's why there are 1.3 billion of them over there...


slewie the pi-rat's picture

the crimex sez:  Accordingly, a need for capital risk management tools for the Chinese currency has emerged.

translation:  we need china's capital.  they can print yuan and sell it thru us, then they can buy Treasuries with the green stamps. 

actually, i haven't a clue, as usual...but, with china + banksters + crimex, i'm sure we'll all dream of unicorns & teddy bears, tonite!

HungrySeagull's picture

No my dreams of a dark sky with glowing ashes on a scale never before seen.

camoes's picture

So are we going to blame JPM if the renmimbi plunges after it starts trading at CME?

TruthInSunshine's picture
by camoes
on Sun, 07/10/2011 - 23:30

So are we going to blame JPM if the renmimbi plunges after it starts trading at CME?

Let me rephrase that question, properly:

So, why wouldn't any rational human being blame JPM for being at least partly responsible for rigging renmimbi movements in ways beneficial to whatever its interests are at any particular point in time?


Much better.

PulauHantu29's picture

The King is Dead!

Long live The Queen!

rapier's picture

This is an odd one.  The settled price is the price  "published", meaning set by the  the PBC. Exactly how is that a market?   How is that even possible or rather why trade something whose price is set outside the market?   Maybe I am missing something.  Isn't the settled price supposed to be the price at the market in question? In this case in Chicago at the CME not on some piece of paper issued in Bejing by the PBC.