The Hong Kong Mercantile Exchange (HKMEx) - expected to launch in the first quarter of 2009 - will initially concentrate on US dollar oil contracts. The exchange aims to provide a bridge between the international commodities markets and China.

"HKMEx will provide an efficient and transparent pricing platform for end-users and the global trading community to trade tailor-made contracts, hedge pricing risks in China and across the region, lower transactions costs and increase participation by Chinese commodities traders," says the new exchange in a statement.

HKMEx - which still needs regulatory approval from the Hong Kong Securities and Futures Commission - is reported to have pledges of investment from Barclays Capital, Cantor Fitzgerald, CITIC Group, Lehman Brothers, Merrill Lynch, Morgan Stanley and Noble Group, among others.

Transatlantic exchange Nasdaq OMX has been selected by HKMEx to supply a trading platform specifically tailored for the commodity marketplace.

"In order to create and handle high liquidity and trading volumes on our exchange, we need to operate on a secure and scalable high-end platform," says Barry Cheung, chairman, HKMEx.

"The platform that we are delivering will put HKMEx in a prime position to create a fluid and efficient commodities market," adds Markus Gerdien, EVP, market technology, Nasdaq OMX. "It will also enable HKMEx to easily introduce new products as they expand their offering."

London-based LCH.Clearnet has been selected to provide clearing services. Commenting on the new deal, Roger Liddell, chief executive, LCH.Clearnet, says: "The commodities markets in China and across the region are developing fast and have huge potential."

Meanwhile UK vendor Patsystems' says HKMEx will offer traders its front-end applications J-Trader and Pro-Mark, which include options trading capability, flexible charting, Excel integration and spreading tools.

The exchange will also use Patsystems' post-trade risk management system, Risk Informer, to manage margin risk for all asset classes.