In an article from South China Morning Post, it was mentioned that Beijing will soon announce a plan to allow foreign commodities exchanges to set up their own futures delivery warehouses in the mainland’s first free-trade zone in Shanghai. This move is directly challenging Singapore and South Korea’s regional dominance in this business and helping Hong Kong Exchanges and Clearing to expand into commodities trading.

Sources familiar with the situation told the South China Morning Post Premier Li Keqiang had recently signed off on this plan, which would be officially announced in the coming days as part of the detailed new rules for the development of Shanghai's proposed free-trade zone.

According to another source, until the plan is formally announced, government would “gradually approve foreign firms to participate in commodities futures trading” in the free-trade zone that would be established in the Pudong New Area. This source added that these companies could be experienced commodities futures trading houses that already operated in major global futures markets such as London and Chicago.

Another source added that "Having their own futures delivery warehouses in the free-trade zone can help domestic commodities buyers save trading and transport costs. They can then rely less on foreign warehouses, for example, in South Korea's Busan and in Singapore".

This policy, if implemented, will benefit one company in particular – HKEx’s Metal Exchange – who completed a takeover of LME in December of last year (2012) in a bid to expand into commodities. LME is the world’s largest metal exchange, with a turnover of US$14.5 trillion last year, and does not  currently have any warehouses in mainland China.

To access the full article which contains additional information on the policy and its details, click here.