KVB Kunlun’s Chinese business to no longer generate revenues from spot trading in precious metals on TPME

Maria Nikolova

Tianjin Precious Metals Exchange (TPME) will suspend the opening of new trading positions for all spot commodities with effect from June 12, 2017.

The monumental role of China for the electronic trading industry has been reiterated numerous times, and a number of Hong Kong brokerages target clientele in mainland China. The Chinese market has been a key one for KVB Kunlun Financial Group Ltd (HKG:8077) for several years already.

Today, however, the broker published a not so rosy announcement about its Chinese business. KVB Kunlun will no longer be able to generate revenues from the spot trading business in precious metals on the Tianjin Precious Metals Exchange (TPME) after June 12, 2017, due to risk-reduction measures implemented by the Exchange.

Back in June 2016, Zhuhai Hengqin Kunlun Financial Exchange Limited (KVB ZHHQ), an indirect wholly-owned subsidiary of KVB Kunlun, and TPME entered into an agreement, pursuant to which TPME has agreed to provide KVB ZHHQ with a spot trading and settlement platform for precious metals and relevant consultancy services, training services, coordination services and management services.

KVB Kunlun’s Directors said back then the agreement would strengthen the exposure of the brokerage in the PRC market, as well as broaden its customer base and bolster its trading volume and profit.

About one year after signing that Membership Agreement, KVB Kunlun received a notice from TPME informing it that the Exchange will adjust its precious metals spot trading business in order to reduce the trading risks. In the notice, received by KVB Kunlun on June 2, 2017, TPME says it will suspend the opening of new trading positions for all spot commodities traded on the Exchange with effect from June 12, 2017. The closing of existing trading positions is set to be unaffected by the changed rules.

KVB Kunlun says it has no information on when or if the suspension will be lifted.

Although the brokerage will see this particular revenue stream come to a halt after the suspension, the Directors believe the suspension will not have a significant effect on the business and its current financial position. KVB Kunlun remains committed to its Chinese business and aims to continue to explore other opportunities in respect of commodities trading in the PRC.

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