SINGAPORE (Feb 13): United Overseas Bank has added two foreign exchange (FX) solutions to its expanding suite of cross-border financial products and services in China.
The first solution enables onshore banks in China to trade directly with banks overseas via the R5-SHCH Connect without having to source for counterparties and to negotiate prices individually.
The launch of the R5-SHCH Connect was established as part of the China-UK collaboration on financing infrastructure to support China's Belt and Road Initiative (BRI).
UOB is the first foreign bank to execute offshore Renminbi (RMB) transactions using R5-SHCH Connect, an FX trading platform set up as part of a partnership between the Shanghai Clearing House (SHCH) and London-based financial technology firm R5FX.
Banks registered for the R5-SHCH Connect service can conduct clearing for spot transactions in the US dollar against the Hong Kong dollar, the British pound against the US dollar and the euro against the US dollar. The service is expected to extend to other currencies and derivatives in the future.
The second new FX solution is direct trading between the RMB and the Thai Baht. UOB is among the first market makers able to support direct trading for its clients through the China Foreign Exchange Trade System (CFETS). CFETS launched direct trading between the RMB and the Thai Baht on Feb 5.
With the BRI creating business opportunities in Thailand and the neighbouring Southeast Asian countries, more Chinese companies require settlement of trade and investment activities in Thai baht.
In Myanmar, the Thai baht is also one of the preferred currencies for local businesses. However, direct trading between the two currencies was allowed only in limited Chinese regional interbank markets in the past.
As such, Chinese companies have faced challenges to fund projects. The FX solution UOB provides will be able to help the companies overcome these challenges.