ASX and Bank of China to expand renminbi trading services 20 November 2014 5:32PM John Kavanagh The Australian Securities Exchange has signed a heads of agreement with Bank of China to expand their strategic cooperation to develop the renminbi as a currency in Australian financial markets.The ASX announcement yesterday follows Tuesday's news that the People's Bank of China has appointed Bank of China as the official RMB clearing bank in Australia.In February the ASX announced that it would establish an RMB settlement service in partnership with Bank of China. This meant that counterparties would be able to use RMB as a settlement currency for trade deals, foreign exchange transactions and investments. By no longer having to use US dollars as a settlement currency, counterparties would save time and money. The deal also opened up the possibility that Australia could be a hub for RMB transactions throughout the region.The settlement service was launched in July with five participants - the big local banks and one international bank (which has not been named).The general manager of settlement services at the ASX, Andrew White, said that since July, the ASX has been testing its system and the banks have been building their own systems.White said that, with the appointment of the official clearing bank this week, transactions would start to flow through the system.He said the system was set up to handle trade related, funds management and foreign exchange transactions.The appointment of an official clearing bank provides a direct link to China's central bank and access to China's real-time gross settlement system. The heads of agreement means that the ASX and Bank of China will start to look for other opportunities, including trading in fixed income securities and other debt market products, commodity derivatives and equity capital.