TORONTO (Reuters) - Bank of Montreal (BMO.TO) said on Tuesday it had been named the first and only Canadian bank approved by the People’s Bank of China to quote the Canadian dollar against the yuan as a market maker in the China Foreign Exchange Trade System.
The approval was granted to BMO Capital Markets, the lender’s investment and corporate banking arm, and came into effect on Monday.
“The launch of direct trading between CAD and CNY promotes the use of Chinese and Canadian currencies in cross border trade and investment settlement,” C.J. Gavsie, MD & Co-Head, Global Fixed Income, Currencies & Commodities & China Capital Markets at BMO Capital Markets, said in a statement.
On Friday, the operator of China’s forex trading platform said it would establish a direct trading pair between its yuan currency and the Canadian dollar in the interbank foreign exchange market from Nov. 14.
Bank of Montreal said on Tuesday it also expects the move to spur bilateral trade.
In September, Canada and China agreed to launch exploratory discussions for a possible Canada-China Free Trade Agreement.
Last year, North America’s first yuan hub was launched in Toronto to foster increased trade and investment activity with China, already Canada’s second-largest trading partner.
Activity at the hub has fallen short of the heightened levels expected at its launch and local banks should be doing more to spur growth, an Industrial and Commercial Bank of China executive said in April.
Reporting by Fergal Smith; Editing by David Gregorio