US, EU banks in talks to trade RMB electronically

ICAP and Thomson Reuters are in discussions with US and European banks about using a new electronic platform to trade the renminbi, the Wall Street Journal reported. The two firms began exchanges on their electronic-trading platforms last week. ICAP says it handles several trades a day, averaging US$2 million per trade. Yet while trading in renminbi is still restricted to a small quantity of the currency circulating in Hong Kong, many analysts see it as a first step to the renminbi becoming a global currency. Beijing has encouraged a limited amount of offshore trading in recent months, but it is unclear if this will continue should the value of offshore and onshore yuan diverge sharply. Offshore renminbi currently trades at a 1.6% premium to onshore renminbi, as benchmarked against the dollar.