Government probes shuttered HKMEx

Regulator discovers serious irregularities in bourse.

The Securities and Futures Commission is investigating the Hong Kong Mercantile Exchange but refused to give any details about the kind of irregularities they are investigating. SFC said its investigation was launched on May 15.

HKMEx, headed by Chairman Barry Cheung, last week announced it has ceased trading because its trading revenue couldn't support its operating expenses.

Neither the SFC nor police would give any details about their investigations. SFC said its investigation was launched May 15.

Cheung took an immediate leave of absence May 21 from public duties. No allegations of wrongdoing have been made against Cheung, who has chaired HKMEx since its founding in 2008. Cheung told media that he and the exchange will fully cooperate with investigations.

Cheung, a personal friend of Chief Executive Leung Chun-ying, holds various public positions and is a non-official member of the city's cabinet under Leung.

HKMEx started trading U.S. dollar-denominated gold futures on an electronic platform in 2011. It was an attempt to attract Asia's commodity traders away from established bourses in Chicago and London. HKMEx, however, said it failed to attract enough trading revenue to sustain its operations.