October 15, 2015 / 7:54 AM / 2 years ago

Ex-Jefferies duo banks on futures beyond metals

* New firm to tap explosive growth in China hedge funds

* Sees opportunity in ShFe new oil contracts

* Sees potential in HKEx tie-ups with mainland bourses

By Melanie Burton

MELBOURNE, Oct 15 (Reuters) - Two Hong Kong-based metals veterans have set up a broad-based futures brokerage to tap into an expected boom in East-West investment, as a commodities downturn drives investors to seek new markets.

BANDS Financial, run by John Browning and Tiger Shi, formerly of Jefferies and earlier, NewEdge, received a futures broking licence from Hong Kong’s Securities and Futures Commission this week.

The pair aim to use their broking background to expand into futures across equity stock indices, energy, interest rates, foreign exchange and other commodities.

They hope to tap into an explosion in China’s private funds and Western interest in China, at a time when inbound and outbound investment is set to grow as the Hong Kong and mainland Chinese exchanges plan a series of tie-ups to boost investment.

“We were in the right place for the commodities story. And now we are in the right place for the changing Chinese financial landscape,” Browning, who is Managing Director, told Reuters.

The duo have more than four decades of metals market experience between them and have been based in Hong Kong since 2008. Browning’s background includes a stint on the London Metal Exchange (LME) board, while Shi started his career at China’s State Reserve Bureau in the 1990s.

Including securities, private equity and venture capital, the number of China’s registered funds surged to more than 20,000 by end-September from nearly 7,000 in January, data from Asset Management Association of China shows.

LME business currently accounts for about 10 percent of total futures business coming out of China, from 40 percent two to three years ago, Browning said.

“Outbound business is not any smaller, it’s just changed its composition. There’s no overriding commodity story in base metals so investors are looking at opportunities elsewhere.”

Those may come in the form of tie-ups that Hong Kong Exchanges and Clearing, owner of the LME, plans with mainland exchanges.

BANDS is also eying plans by the Shanghai Futures Exchange to open a new oil contract as an opportunity to bring in global investors.

“We are not aiming to be a crude oil or energy broker, but to participate in the infrastructure building. Eventually this contract will lead to the next opening up of copper, and other metals contracts,” said Browning, who played a key role in the development of the LME’s electronic trading system.

BANDS Financial plans an official launch in Shanghai or Hong Kong early next year. (Reporting by Melanie Burton; Additional reporting by Ruby Lian in Shanghai; Editing by Richard Pullin)

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