London Clearing House: The RMB will surpass the yen to become the world's second largest currency for dollar option trading.

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The renminbi's status in the global foreign exchange options market is accelerating. The London Clearing House (LCH) predicts that the USD/CNH pair is expected to surpass the USD/JPY pair by 2028, becoming the second largest traded FX option currency pair globally, just behind the EUR/USD pair.

Andrew Batchelor, head of ForexClear, LCH’s FX clearing division, said in an interview that this ranking change will be confirmed in the Bank for International Settlements (BIS) next triennial FX and OTC derivatives market survey in 2028. He also pointed out that any bank with large volume trades in EUR/USD or USD/JPY FX options will welcome the ability to clear USD/CNH options via the LCH.

Data Evidence: Renminbi Option Trading Volume Is Rapidly Catching Up to Yen

The latest survey data from the BIS clearly shows the narrowing gap between the renminbi and the yen.

According to the survey report released last year, the daily average trading volume of renminbi FX options was $82 billion, yen was $102 billion, and euro was as high as $236 billion.

On a broader scale, the renminbi's share in global currency trading—including spot, forwards, swaps, and options—has risen to 8.5%, a significant increase from 7% in 2022. By comparison, the US dollar is at 89%, the euro at 28.9%, the yen at 16.8%, and the pound at 10.2%.

Andrew Batchelor pointed out that the factors driving the increased use of renminbi are diverse: expansion of real economy trade and cross-border capital flows, rising international risk management requirements, and the entry of more non-bank institutions seeking trading opportunities.

Chinese Government Bonds: LCH Sets Up the Next Collateral Frontier

Middle East conflicts and US policy uncertainties are simultaneously boosting international use of both the US dollar and renminbi.

According to data from global financial messaging provider Swift, the US dollar’s share in international transactions reached a historic high of 51.1% in March this year; meanwhile, China’s Cross-Border Interbank Payment System (CIPS) also recorded a single-day transaction volume high in early April.

At the same time, LCH’s renminbi strategy extends beyond FX option clearing to global collateral applications for Chinese government bonds.

According to Andrew Batchelor, LCH will, via EuroClear in 2025, include euro- and dollar-denominated offshore Chinese bonds as eligible non-cash collateral.

Next, LCH plans—possibly as early as the beginning of Q3 2026—to include offshore renminbi-denominated Chinese government bonds in its collateral system. Subsequently, it will also consider, through Hong Kong partner CMU OmniClear, introducing settlement services for offshore renminbi Chinese government bonds.

Andrew Batchelor stated that Chinese government bonds have enormous potential as global collateral. Chinese banks hold large amounts of such assets and are increasingly externalizing their holdings to achieve greater portfolio diversification, laying the foundation for their widespread use in the international clearing system.

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