2021 is the 100th anniversary of the founding of the Communist Party of China. In the past 100 years, the financial industry under the leadership of the Communist Party of China has achieved leapfrog development and drawn a magnificent picture.
As an important part of the capital market, the development of the financial futures market is inseparable from the strong leadership and scientific planning of the party. China Financial Futures Exchange (hereinafter referred to as CFFE) adheres to the guidance of Jinping Xi, and under the strong leadership of the China Securities Regulatory Commission, the goal of "a transparent, open, dynamic and resilient capital market" will strengthen the party’s leadership throughout the market construction and exchanges, based on serving the capital market and the real economy, cohesively and diligently. Continuously promote the high-quality development of the financial futures market.
On the 100th anniversary of the founding of the Communist Party of China, a reporter from the Futures Daily interviewed Qingwen He, secretary of the party committee and chairman of the China Financial Futures Exchange.
Futures Daily: Please talk about how CFFE strengthened the leadership of the party to provide a strong guarantee for the stable and healthy development of the financial futures market.
Qingwen He: As an important financial market infrastructure, CFFE undertakes the mission of building and developing China's financial futures market. Upholding the party's leadership and strengthening party building are the prerequisite and foundation for us to do all our work well. A series of important expositions by General Secretary Xi Jinping on comprehensively and strictly governing the party provide a fundamental basis for us to uphold and strengthen the party's overall leadership in the new era.
The first is to always put political construction in the first place, emphasize politics with a clear standard, and earnestly implement the "two maintenances" into daily work and specific actions.
The Party Committee of CFFE adheres to the guidance of Xi Jinping thought on socialism with Chinese characteristics for a New Era, deeply recognizes that the exchange is a party-run enterprise, resolutely implements the decision-making and deployment of the Party Central Committee and the work requirements of the party committee of the Securities Regulatory Commission, and gives full play to the party committee’s direction and overall management., ensure the implementation of the leadership role, continuously improve the political position, consciously put the construction of the financial futures market in the strategic overall situation of the Party Central Committee and the State Council and the overall situation of the deepening of the capital market reform and development to plan and promote, and strive to promote the healthy development of the real economy and provides higher quality and more efficient risk management services.
Continuously strengthen the innovative theory, deepen ideological construction through platforms such as the Party Committee Theoretical Learning Center Group and School of the CFFE, build a solid ideological foundation for the "two maintenances", and strive to transform the theoretical learning results into various tasks to promote the reform, development and stability of the financial futures market as the actual results.
The second is to vigorously promote the in-depth integration of party building and business, and lead the high-quality development of the financial futures market. The integration of party building and business is not only an objective requirement for comprehensive and strict governance of the party, but also the only way to promote the development of the exchange business. The party committee of the CFFE insists on co-conspiring, deploying, advancing, and evaluating party building and business, and implements party building in the specific work of the exchange, testing party building results with business results, and striving to achieve party building and business work."
In accordance with the relevant arrangements of the Party Central Committee to promote the prevention and control of the new crown pneumonia epidemic and economic and social development, CFEE resolutely implements the relevant spirit, assists the development of the anti-epidemic work, helps small and medium-sized enterprises resume work and production, stabilizes employment, and guarantees the basic lives of the people.
In 2020, the Ministry of Finance will successively tender for the issuance of 4 phases of special treasury bonds for the fight against the epidemic with a total of 1 trillion yuan. After the issuance of special treasury bonds, CFFE announced immediately that they would be included in the scope of treasury bond futures deliverables, so that underwriters can use 5-year and 10-year treasury bond futures to accurately hedge interest rate risks and escort their smooth issuance.
The third is to build a strong fortress with the core of enhancing organizational power and exerting political functions. The party committee of CFFE adheres to goal-oriented and problem-oriented, and has issued a work plan for strengthening grassroots party building and an action plan for improving the quality of party building, providing a target for party branches to strengthen standardization and to build the “four-strong” party branch. Further establish and improve the "Party Building +" work model, and drive party members and cadres in safe production, business development, epidemic prevention and control.
The fourth is to establish a co-directed force, through and coordinated work mechanism to provide a solid style guarantee for the development of the financial futures industry. The party committee of CFFE insisted on taking responsibility for cadres, issued relevant implementation opinions, strengthened staff ability training, and enhanced the "responsibility" of the cadre team; on the other hand, it focused on the construction of party style and clean government, and carried out the main tone of "strict" throughout, and continued to implement "discipline" We will continue to strengthen the awareness of discipline and rules, gradually improve the all-round and three-dimensional supervision system, strengthen the power operation supervision and anti-corruption struggle, and promote the integration of the anti-corruption, non-corruption, and anti-corruption activities, and strive to create The political ecology of the exchange is clean and upright.
2021 is the 100th anniversary of the founding of the Communist Party of China. In accordance with the instructions of the Party Central Committee and the deployment requirements of the Party Committee of the Securities Regulatory Commission, the Party Committee of CFEE has carried out party history learning and education, leading the majority of cadres and employees to inspire and clarify the struggle and great achievements of the party. Maintain the party’s glorious traditions and fine style of work, strengthen the conviction and gather strength; to systematically master the party’s practical creation and historical experience to inspire wisdom, strengthen character, and effectively learn and educate the party history and promote the high-quality financial futures market and strives to make a good start to the capital market for the 14th Five-Year Plan period.
Futures Daily: The financial futures market is an important part of the multi-level capital market and the modern financial system. In recent years, what efforts has CFEE made to continuously expand product supply and promote market functions?
Qingwen He: CFEE deeply understands that the financial futures market is an important part of the multi-level capital market and the modern financial system. The effective functioning of the financial futures market is conducive to enhance the innovation capabilities of financial institutions, enhance corporate financing convenience, and promote long-term capital formation can better serve the development of the real economy.
The first is to enrich the financial futures and options product system. In 2010, CFEE successfully launched CSI300 stock index futures, starting a new journey in the development of the financial futures market. After that, the SSE 50 and CSI 500 stock index futures, 2-year, 5-year, 10-year treasury bond futures and CSI 300 stock index options were successively listed. Up to now, a total of 7 financial futures and options have been listed, covering equity and interest rates. In 2020, a total of 115 million lots and 115.4 trillion yuan were traded in the financial futures market, accounting for 1.87% and 26.38% of the domestic futures market respectively. At present, the financial futures market is in good order and its functions are gradually playing out, maintaining the development trend of "stability and progress in stability". In the next step, CFFE will continue to serve the real economy as its fundamental purpose, accelerate the innovation and supply of new products, and strive to enrich the equity, interest rate, exchange rate futures and options product system according to market needs, and actively promote 30-year treasury bond futures and wait for the launch of new products to fill up the shortcomings in the financial risk management market as soon as possible.
The second is to attract more medium and long-term funds into the market. Due to the strong professionalism of financial investment, the risk of investors directly participating in transactions is relatively high. Entering the market through professional wealth management institutions will help investors better share the institutional dividends brought about by the reform and development of the capital market under the premise of risk management. Under the leadership of the China Securities Regulatory Commission, CFFE has always attached great importance to the participation of medium and long-term funds in market construction.
In 2020, the participation of commercial banks in the Treasury Bond Futures business was officially launched, and the China Banking and Insurance Regulatory Commission officially issued the "Regulations on the Participation of Insurance Funds in Treasury Bond Futures Trading". Substantial progress was made in the insurance market. At present, banks, insurance, securities, public offerings, private placements, trusts, futures subsidiaries, QFII, RQFII, pension funds, etc. have all been allowed to participate in the financial futures market, and the total positions of institutional investors have taken a dominant position.
The structure of market participants continues to show a trend of institutionalization and specialization. As of the end of June 2021, the positions held by stock index futures, treasury bond futures, and stock index options agencies accounted for 69%, 87%, and 57%, respectively. In the future, CFEE will further promote the optimization of the policy environment for medium and long-term funds entering the market, promote commercial banks and insurance funds to fully participate in treasury bond futures transactions, and actively promote various institutions to participate in the stock index options market.
Futures Daily: The sudden new crown pneumonia epidemic has had a greater impact on China's economic operation. What role have financial futures played in serving the national strategy and promoting the development of the real economy?
Qingwen He: The occurrence of the new crown pneumonia epidemic has had a great impact on China's economic operation, and the government's need for raising financial funds, coordinating the promotion of epidemic prevention and control, and economic and social development has highlighted. At the same time, infrastructure, logistics, supply chain and other related companies also have strong financing needs in order to speed up the resumption of work and production. Therefore, serving the national strategy, coordinating with the prevention and control of the epidemic, facilitating the financing of various entities such as the government and enterprises, and promoting the resumption of work and production of enterprises have become the top priority to maintain the steady economic development.
As an important financial market infrastructure, while maintaining its own safe production, CFFE actively helps to improve the prevention and disposal mechanism of financial market risks, and keeps the bottom line of systemic risks free; on the other hand, it gives full play to financial futures. The risk hedging function has contributed to enhancing investors' enthusiasm for bond subscription, serving anti-epidemic special treasury bond issuance, and facilitating related entities to successfully raise funds through the capital market in an environment of high volatility in the financial market.
The first is to serve the issuance of local government bonds and support the construction of major infrastructure projects. In 2020, the issuance of local government bonds in China will accelerate and increase, most of which will be used for major livelihood infrastructure and public sector projects. The interest rate of local government bond issuance refers to the yield of treasury bonds of the same maturity, which is highly correlated with the price trend of treasury bonds but has poor liquidity. Institutions use treasury bond futures for price risk hedging, which helps to enhance bond holding confidence.
The second is to serve the product innovation of financial institutions and help entity companies save financing costs. During the epidemic, many companies need to raise funds through the credit bond market, and market volatility has intensified, facing huge risks of rising financing costs. In this context, financial institutions use standardized treasury bond futures as components to design over-the-counter products to hedge interest rate risks, opening up the risk transfer path of the enterprise-financial institution-treasury bond futures market.
The third is to serve financial risk management and help the stable operation of the market. Financial futures are market-based risk management tools. When financial markets fluctuate sharply, especially when they are impacted by major events such as the new crown pneumonia epidemic and credit debt defaults, they give full play to the positive role of alleviating the selling pressure on the spot market and stabilizing market expectations. The stable operation of the market and continuous functioning provide an important guarantee.
Futures Daily: Accelerating the construction of a new development pattern with the domestic cycle as the main body and the mutual promotion of the domestic and international double cycles is a major strategic task proposed by our party that relates to the overall development of our country. How do you understand the application of the new development pattern in the futures market? Specifically, how will CFFE implement the new development pattern in the future?
Qingwen He: The Fifth Plenary Session of the 19th Central Committee of the Communist Party of China clearly stated that it is necessary to "form a strong domestic market and build a new development pattern", "implement a high-level opening up to the outside world, and open up a new situation of win-win cooperation." The new development pattern requires a more effective combination of making full use of the advantages of the domestic ultra-large-scale market and a complete industrial system, and making good use of the domestic and overseas markets. To achieve mutual promotion of the domestic and international double cycles, the key is to open up the various blocking points in the cycle, so that both cycles are unblocked. Research and exploration to expand the opening of risk management markets such as financial futures is of great significance for promoting the high-quality development of my country's capital market, opening up the blockages in the financial system, and promoting the formation of a new development pattern.
Generally speaking, a sound and complete capital market system can be divided into three levels: one is the issuance market, which satisfies the basic financing function of the market; the other is the trading market, which realizes the market pricing function through the circulation and transactions of securities; and the third is the first level. Based on the issuance market and the secondary trading market, the derivatives market that specializes in risk management mainly divides, transfers and redistributes financial market risks, and optimizes the market risk structure. The three markets are closely linked with complementary functions and symbiosis. They are indispensable and form a stable and smooth capital market circulation system.
At present, in financial spot markets such as stocks and bonds, foreign investors can participate in China’s bond market through QFII, RQFII, direct investment interbank bond market (CIBM), Bond Connect and other channels. They can also participate in China’s bond market through QFII/RQFII, Shanghai-Hong Kong Stock Connect, Shenzhen and Hong Kong Stock Connect model. In contrast, in the financial futures market, QFII/RQFII are now only allowed to participate in stock index futures for the purpose of hedging, which is far behind the openness of the spot market and cannot meet the risk management needs of foreign investment in China’s capital market. This requires the opening of China's financial futures market to adapt to the pace of opening of the financial spot market, allowing investors participating in the spot market to use risk management tools such as financial futures, opening up the blockage of the risk management market that is not smooth, and accelerating the construction of a new development pattern for services.
The Central Economic Work Conference clearly stated that the capital market plays a role in affecting and moving the whole body in financial operations. Therefore, the opening of capital markets, especially financial futures markets, should put risk prevention first, firmly hold the bottom line of risks, and improve cross-border supervision of financial futures markets, strengthen extensive cooperation with overseas regulatory agencies and international financial organizations, and enhance cross-border cooperation. Ability to monitor the flow of overseas capital, explore information and data sharing, severely crack down on cross-border violations of laws and regulations, and effectively safeguard the legitimate rights and interests of investors in various countries.
Futures Daily: The prevention and control of financial risks has been elevated to an important part of the national strategy. How does CFFE adhere to legal supervision and technological supervision? What efforts have you made to continuously improve the effectiveness of supervision and keep the bottom line of systemic risks free?
Qingwen He: In the supervision work, for the prevention and control of financial risks, CFFE consciously fulfilled the original mission of the party, adhered to the "four awes" and "one joint force", promoted the steady and healthy development of the financial futures market. The bottom line of risk serves the overall situation of the reform and development of the capital market.
The first is to strengthen basic system construction and cross-market supervision and coordination. CFFE actively participated in the promotion of futures market legislation, continued to promote the construction of the financial futures market basic system, and successively introduced one-side large margin, cross-variety large-side margin, treasury bond as margin, treasury bond payment (DVP) delivery mode, basic systems and trading mechanisms such as market maker business and EFP will strive to improve the operating quality of the financial futures market and the level of serving the capital market. At the same time, continue to strengthen the supervision and coordination of the futures and spot markets, and jointly establish a cross-market supervision and coordination mechanism with the Shanghai Stock Exchange, the Shenzhen Stock Exchange, the China Securities Depository and Clearing Corporation, and the China Futures Market Monitoring Center. Fully cooperate with the China Securities Regulatory Commission to establish a working mechanism for itinerant trials in our firm, participate in the innovation of the administrative law enforcement system, earnestly implement the "zero tolerance" requirement, and severely crack down on all kinds of violations of laws and regulations.
The second is technological innovation, constantly improving technological supervision and first-line supervision capabilities. Strengthen the construction of technological infrastructure, continue to enrich market-oriented front-line supervision methods, and actively promote big data and artificial intelligence. The application of various scientific and technological supervision methods is used as a "weapon" to find "clues" and help risk prevention and control. At present, the main performance indicators of the new-generation trading system adopted by CICC have reached international standards; the second-generation monitoring system implements distributed database deployment, completes the construction of data clustering services, adds microsecond time stamps to greatly improve analysis capabilities, and enters the stage of intelligent supervision.
The third is to do a good job in safe production, build a strong line of defense against risks, and maintain financial security. CFFE attaches great importance to safe production, insists on seeking progress while maintaining stability, strengthens settlement operation and maintenance management, improves emergency response capabilities, combines civil air defense technology and defense, and jointly builds a safe production line of defense. In January 2019, the China Securities Regulatory Commission officially approved CFFE as a Qualified Central Counterparty (QCCP). As an important financial market infrastructure, CFFE provides safe and efficient financial derivatives trading and clearing services to the market, and assumes the responsibilities of the central counterparty. At present, the financial futures market has established a set of market risk handling mechanisms.
Futures Daily: From "poverty alleviation" to "rural revitalization", the futures industry has always been committed to serving the national strategy. What work has CFFE done to help fight poverty? How will the futures market be used to better serve the revitalization of rural areas?
Qingwen He: Since pairing to help Yanchang County, Shaanxi Province in 2013, CFFE has always taken poverty alleviation work as a lofty political responsibility, guided by General Secretary Xi Jinping’s important statement on poverty alleviation work, and earnestly implemented the party Central Committee and the Party Committee of the China Securities Regulatory Commission’s poverty alleviation efforts. Adhering to the strategy of targeted poverty alleviation, we have invested 104 million yuan in assistance and implemented 137 poverty alleviation projects. On September 29, 2018, the Poverty Alleviation Office of the State Council announced to the public the results of Yanchang County's poverty alleviation. Yanchang County became the first poverty alleviation counties in Shaanxi Province and the first poverty alleviation county in the designated assistance counties by the securities and futures system since the 19th National Congress of the Communist Party of China.
The first is to highlight the goal of precise drip irrigation, seize the "little apple" to make a "big article", and pry the transition from "blood transfusion" to "blood-making" for wealth creation. The apple industry is the pillar industry of Yanchang County. Seventy percent of farmers in the county grow apples, and more than 65% of farmers' per capita income comes from the fruit industry. CFFE firmly grasped the "bull nose" of the apple industry and actively implemented the spirit of General Secretary Jin Ping's instructions on "studying how to solve the problems of reducing production due to disasters, different prices for the same fruit, and difficult harvests in good years", and coordinated the launch of the ZCE Apple futures, a variety of agricultural products for poverty alleviation, provides support and assistance in the fields of price, production, industrial upgrading, and poverty alleviation by consumption.
The second is to leverage the unique advantages of “finance +” targeted poverty alleviation, strengthen collaboration and linkage, and form a joint force for poverty alleviation. Taking advantage of the market organizer, CFFE has successively coordinated more than 60 securities, futures, funds, banking institutions, etc., and established a new social poverty alleviation mechanism with "one company taking the lead and participating together". In conjunction with the China Futures Industry Association, we have carried out Accurate Assistance Programs for two consecutive years. Focus on supporting the development of characteristic industries such as apple, and coordinate the establishment of a sales department in Yanchang County through the Shaanxi Securities Regulatory Bureau to coordinate Yangtze River Futures. Coordinated the launch of the "ICBC Easy Farm Loan" for apple industry poverty alleviation financing financial products, we create a new financial poverty alleviation model of "five in one" of insurance, futures, banks, government, and farmers. Fruit farmers have successfully achieved stable income and increased income.
The third is to focus on the improvement of people's livelihood, focusing on the "two no worries and three guarantees" and other issues that are of most concern to the masses and the most urgent issues to carry out assistance and relief efforts to make poverty alleviation more "warm." Persist in the combination of poverty alleviation, intellectual and aspirational support, and for the first time in Yanchang County to achieve full coverage of education poverty alleviation at all stages. Increase investment in health and poverty alleviation, implement maternal and child health promotion projects, and fund the development of key personnel training programs for maternal and child emergency and critical illness medical care. Increase investment in infrastructure construction, closely follow the focus of the construction of beautiful villages, and improve the ecological environment through multiple measures such as the renovation of dilapidated houses, the "toilet revolution", and the management and protection of greening.
In the next step, CFFE will continue to focus on the function of the futures market to better serve the revitalization of rural areas. Deepen policy research, explore and innovate the "futures + technology + banking" model, continue to work with industry forces to strengthen apple's futures functions, improve the "insurance + futures" business model, and further stabilize the income of fruit farmers. Continue to give full play to the leading advantages of the exchange industry, actively encourage collaboration with various financial institutions and industry units to explore and establish a long-term mechanism to solve relative poverty, improve the market competitiveness and anti-risk capabilities of Yanchang county's specialty products, and focus on enhancing endogenous development motivation and development vitality.