From zero to one, from small to large, from weak to strong, why can China's futures market succeed?
This year is the 100th anniversary of the founding of the Communist Party of China, and China's futures market has also gone through 30 years of development. The 30-year development history and development achievements have proved: strengthening the party’s centralized and unified leadership over economic work is a major advantage of the socialist system with Chinese characteristics and a fundamental guarantee for strong economic work. If China's futures market is to take advantage of the trend and start a new journey of high-quality development, it must unswervingly insist on strengthening the party's overall leadership over the futures market.
China's futures market has embarked on a road to success in 30 years
On October 12, 1990, China's Zhengzhou Grain Wholesale Market opened, this opened the prelude to the development of China's futures market. Over the past 30 years, the Chinese futures market has grown from zero to one, from small to large, from weak to strong, and it has embarked on an extraordinary path of development.
Continuous improvement of product system
Over the past 30 years, following the requirements of economic system reform and responding to the demand from the real economy, China's futures market has continuously promoted product innovation, starting from the grain and oil spot market, to spot forward contract transactions and the introduction of standardized contracts. It basically forms a future-spot synergy, diversified and open derivatives system. As of the end of 2020, the entire market has 90 futures and options, including 62 commodity futures, 6 financial futures, and 22 options, covering important industries such as finance, agricultural products, metals, energy and chemical industries that are related to the national economy and people's livelihood. At present, mature varieties in the international market have been listed in China. China has also launched unique varieties with Chinese characteristics and international influences such as PTA, apples, and red dates. The variety system is becoming more and more completed, laying a solid foundation for expanding the depth and breadth of serving the real economy.
Rapid growth in market size
In the past 30 years, with the rapid development of China's economy, the trading volume and open interest of various exchanges have shown explosive growth, and the global ranking has continued to move forward. Take the Zhengzhou Commodity Exchange as an example. In 2020, its trading volume reached 1.7 billion lots, compared with 1993 (March 1993, when the Zhengzhou Commodity Exchange was established. In May of the same year, it successfully launched 5 varieties of wheat, corn, soybeans, mung beans, and sesame. The futures trading has achieved the goal of starting from the spot market to the futures development determined by the State Council. Therefore, compared with the value in 1993, it has increased by more than 1,500 times; the turnover is 60.1 trillion yuan, an increase of more than 2,400 times compared with 1993; The volume was 7.134 million lots, an increase of more than 370 times over 1993. The rapid growth of the futures market is evident. From the perspective of the global derivatives market, China's commodity futures trading volume has ranked first in the world for 10 consecutive years, and the three commodity futures exchanges: Zhengzhou Commodity Exchange, Shanghai Futures Exchange and Dalian Commodity Exchange have been among the top 15 global derivatives exchanges for 11 consecutive years. The international influence of China's futures market continues to increase, and the influence to speak in the field of international bulk commodities continues to increase.
Risk prevention and control are more developed
In the past 30 years, China’s futures market has established a "five-in-one" futures supervision work mechanism with the prevention of systemic risks as the bottom line, and established a relatively complete futures market management system and standard system. China’s futures market continues to promote the regulatory transformation, establishes a new system of supervision during and after the event, and promote more procedural and standardized supervision. Implements supervision arrangements, improves programmatic transaction supervision measures, promotes technology-enabled supervision, and enhances market supervision efficiency. Under the impact of the 2008 global financial crisis and the 2020 new crown pneumonia epidemic, China's futures market has been operating smoothly and orderly without major risk events, this fully demonstrates the institutional advantages and governance effectiveness of futures supervision. The results report of China’s “Financial Sector Assessment Program” (FSAP) jointly launched by the International Monetary Fund and the World Bank believes that China’s advanced practices such as penetrating supervision, investor protection, and market risk monitoring are worth to learn by other markets.
Innovation and opening up continue to deepen
In the past 30 years, China’s futures market has continued to explore and practice, and successfully explored business models with distinctive Chinese characteristics in important areas such as product research and development, trading rules, regulatory arrangements, insurance and education, opening to the outside world, and poverty alleviation. China’s futures market has achieved the international influence. Especially in recent years, under the strong impetus of supply-side structural reforms, China’s futures market has achieved historic breakthroughs in many areas: the pace of product listings has accelerated. From 2016 to the end of 2020, a total of 38 new futures and options are listed. Approximately 42% of the existing listed products; the new era of commodity options has opened. Since the first commodity option was listed on March 31, 2017, a total of 22 commodity options have been listed, basically covering the main mature futures varieties; opening to the outside world has achieved new breakthroughs, the introduction of specific products such as crude oil, iron ore, and PTA that are open to the outside world, the complete abolition of restrictions on the foreign shareholding ratio of futures companies, and the acceleration of the two-way market opening.
Significantly improved service capabilities
In the past 30 years, the functions of the futures market have been continuously brought into play. The existing varieties of tools have covered agriculture, metals, energy, chemicals, finance and other major areas of the national economy, and have successively launched "Order + Futures", "Insurance + Futures" and "Basis Trading" and the "Futures+" comprehensive service model is deeply integrated with the real economy and has become an indispensable pricing and risk management tool for economic development. It also contributes futures power to the "Rural Revitalization" and "Poverty Alleviation" strategy. The function of the futures market has also been recognized by all parties. More than 90% of PTA manufacturers, more than 85% of key sugar groups, more than 80% of large and medium-sized cotton trading companies, and about 50% of coal power companies that have entered the top 500 Chinese companies use futures to manage risks, and the “insurance + futures” pilot program has been written into the No. 1 document for many years as a new model of supporting and benefiting farmers. As an important part of the country's modern financial system, China's futures market has become an indispensable "stabilizer" for the high-quality development of the national economy, and plays an important role in serving the real economy and national strategies.
General Secretary Xi Jinping pointed out: "No matter how far we go, we must not forget the way we came." Over the past 30 years, China's futures market has embarked on a path of reform and development that suits national conditions, and has accumulated many valuable experiences that need to be cherished and inherited. One of the most important is that we must always uphold and strengthen the party's overall leadership over the futures market. The leadership of the party is a major advantage of China's futures market and the fundamental guarantee for the development of the futures market.
The leadership of the party gave the futures market the courage to explore
In December 1978, the Session of the Eleventh Central Committee of the Party opened, it states that China's economic system reform and began the transformation from a planned economic system to a socialist market economic system. With the deepening of reforms, the concept of "planned economy is the basic feature of socialist economy". The Session of the Thirteenth Central Committee of the Communist Party of China proposed to establish an economic system and operating mechanism that adapts to the development of socialist planned commodity economy and combines planned economy with market regulation. The futures market has been established and developed in response to the needs of this reform.
The government work report of the State Council in 1988 clearly proposed to explore futures trading. In October 1990, Zhengzhou Grain Wholesale Market started a pilot project for futures trading. However, due to the ideological concerns of "surnamed society and capitalist", the initial progress of the pilot program was slow.
In early 1992, during inspections in Shenzhen, Shanghai and other places, Deng Xiaoping pointed out that "securities, stock markets, are these things good, are there any dangers, are they unique to capitalism, can socialism be used? we will see the in future. If you see it right, do it for a year or two, let it go; if it’s wrong, correct it, and close it. you can close it fast, you can close it slowly, or you can leave a little opportunity. Don’t need to be afraid and we won’t make big mistakes.” (Selected Works of Deng Xiaoping, Vol. 3, p. 273) The spirit of Deng Xiaoping’s “Southern Talks” gave the pioneers of China’s securities and futures markets courage and determination, and encouraged people. Due to this and China has strengthened the confidence that the futures market pilot program will continue. Inspired by this, enthusiasm for reform and opening up has risen throughout the country, and a wave of construction of futures markets has been set off in various places.
In 2013, General Secretary Xi Jinping inspected the DCE and asked to "explore boldly, and strive to find a way to success." In 2014, the "Several Opinions on Further Promoting the Healthy Development of Capital Markets" clearly stated that "continue to launch bulk resource product futures, develop commodity options, commodity indexes, carbon emission rights and other trading tools, and give full play to futures market price discovery and risk management. Function to enhance the ability of the futures market to serve the real economy" "adapt to the needs of capital market risk management, and develop financial derivatives in a stable and orderly manner".
It can be seen that it was the leadership of the party that gave the futures market the courage to explore boldly, breaking the ideological shackles, condensing development consensus, and laying the ideological foundation for future development.
The leadership of the party adheres to the original mission of serving the entity in the futures market
Different from the spontaneous emergence of overseas futures markets, China's contemporary futures market was born out of the inherent needs of price reform and circulation reform at that time, and is a mandatory system change led by the Party Central Committee, the State Council and local governments. The initial pilot project undertook the historical mission of exploring the way for price reform and circulation reform.
After hesitating in the initial stage of the pilot, a series of problems began to emerge with the upsurge of building futures markets in various places, triggering a series of economic disputes and social problems, which also violated the original intention of building futures markets. After careful consideration, the Party Central Committee and the State Council decided to allow the futures market to reform and opening up, continue the pilot program, and to maintain standardized futures exchanges through clean-up and consolidation, mergers and reorganization of some exchanges. To a certain extent, clean-up and rectification is a correction of the futures market's departure from its original mission.
Under the leadership of the party, after clean-up and rectification, with the return of the original mission of "serving the real economy", the government and the market, institutional supply and market innovation began to re-explore boundaries, reach consensus, and cohesive force. The futures market has innovated and developed new derivative businesses such as commodity swaps and warehouse receipt transactions. It has successively launched "futures +" comprehensive service models such as "orders + futures", "insurance + futures", and "basis trading", which are deeply integrated with the real economy and become an indispensable pricing and risk management tool for economic development. The futures market itself has also developed and grown while serving the real economy.
It can be seen that the party’s leadership has upheld the original intention and mission of the futures market to serve the real economy, and avoided the development tendency of the futures market to "remove from reality to virtual". China's futures market has gained inexhaustible momentum for sustainable development because of its fundaments in the real economy.
The leadership of the party firmed the development of the futures market
General Secretary Xi Jinping emphasized that we must adhere to the people-centered approach and continue to realize the people's yearning for a better life. Specific to the futures market, keeping in mind the fundamental purpose of serving the people wholeheartedly, and always taking the people's stand for the development of the futures market, an important task is to safeguard the rights and interests of market investors.
The chairman of the China Securities Regulatory Commission, Huiman Yi, pointed out that China has the world's largest group of public investors, and they have always shared ups and downs with the capital market and grow together. The reform, development and stability of the capital market is directly related to the vital interests of hundreds of millions of families and hundreds of millions of people. It respects and fears investors, resolutely cracks down on all kinds of illegal activities, and effectively protects the legitimate rights and interests of investors. It is a concrete manifestation of the people's character of capital market supervision.
Specific to the Chinese futures market, as of the end of 2020, there are 1.863 million effective customers in the futures market, including 1.804 million individual customers and 59,000 unit customers. Individual customers are still the main force of investors in the futures market. Insufficient knowledge, investment experience, and risk awareness of some investors are also basic national conditions. In addition, the futures market is a high-risk market, and effective protection of the legitimate rights and interests of investors has become the bottom line of the industry. At the same time, as the provider of market liquidity, the influencer of market expectations, and the bearer of market risk, investors' behavior directly affects the functioning of futures market price discovery and risk avoidance. Therefore, protecting the legitimate rights and interests of investors is also an important guarantee for the healthy development of the futures market.
In order to protect investors, under the strong leadership of the Party Committee of the China Securities Regulatory Commission, China's futures market has explored in many aspects: innovatively launch an investor suitability system, implement unified account opening in the futures market, and protect investors from the source; establish futures margin security depository monitoring system to ensure the safety of client funds in the futures market; establish a futures market risk supervision index system to enhance the ability of futures companies to resist risks and protect the rights and interests of investors; establish a futures investor protection fund; actively carry out investor education and launch the "Futures Investment” and other investment and education platforms to build education bases for futures investors at all levels; set up consultation and complaint hotlines and online complaint platforms to receive visits and letters from investors, and continue to accept and respond to investors’ demands; carry out activities and publicity to prevent non-traditional fraud , improve investors' ability to identify illegal futures activities and awareness of prevention. Various explorations have enabled the futures market to build an investor rights protection system with unique Chinese characteristics, creating a "Chinese guarantee" for domestic futures investors. It can be seen that the leadership of the party has firmly established the people-centered development position of the futures market.
The leadership of the party guarantees the development direction of marketization, rule of law and internationalization of the futures market
The emergence of China's futures market served the inherent needs of price reform and circulation reform at that time, and objectively promoted the transformation of China's economic system from a planned economy to a socialist market economy. With the continuous development of the socialist market economy under the leadership of the party, the futures market has also been moving forward in the direction of marketization. For example, the market competition among futures companies has become increasingly fierce, the concentration has continued to increase, and the trend of futures companies becoming heads is obvious.
The futures market is a rule-oriented market under the rule of law. As early as October 1992, China's first futures trading rules-"China Zhengzhou Commodity Exchange Futures Trading Rules" was born, creating a precedent for standardized futures trading. With the promulgation and multiple revisions of the "Interim Regulations on the Administration of Futures Trading" in 1999, the China Securities Regulatory Commission issued a series of regulations and normative documents to regulate the management of futures exchanges, futures companies and practitioners in the futures industry, marking the beginning of the futures market. At present, China’s futures market has formed the core of the "Administrative Regulations on Futures Trading" and other relevant administrative regulations issued by the State Council, and the "Administrative Measures on Futures Exchanges" issued by the China Securities Regulatory Commission as the main body of departmental regulations and regulatory documents. The self-discipline management rules formulated by the China Futures Industry Association are an important part of the institutional standard system. More importantly, the draft of the futures law has been publicly solicited for comments, and for the first time the legal qualitative, regulatory framework, and business norms of financial derivatives have been raised to the level of legislation by the National People's Congress, which reflects the country's work on the development of futures and derivatives markets and the construction of the rule of law. The deep concern and high attention of the company. This shows that under the leadership of the party and the coordination and coordination of various departments, the process of special legislation for China's futures market has accelerated again, and the process of rule of law in China's futures market has taken a big step forward.
In the past 30 years, practitioners in China's futures market have been the pioneers in opening up. China's first standardized futures trading rules were the result of the cooperation between ZCE and the Chicago Board of Trade (CBOT) in the special historical environment in the early 1990s. Since the 18th National Congress of the Communist Party of China, under the strong leadership of the Party Central Committee, China has promoted financial opening in an orderly manner and promoted reform through opening up. The internationalization of the futures market has also entered a new era: crude oil futures, iron ore futures, PTA futures, No. 20 rubber futures, etc. have successively introduced overseas traders, and the path for the opening of certain products has basically taken shape; the expansion and opening policy of the futures service industry has officially landed. The restrictions on foreign shareholding of futures companies will be lifted from 2020. Many futures companies have established overseas subsidiaries, and some have successfully listed on overseas exchanges. Domestic exchanges have gradually deepened their overseas presence through the establishment of overseas offices. It can be seen that the leadership of the party has ensured the development direction of marketization, rule of law, and internationalization of the futures market.
The leadership of the party ensures the rapid and steady development of the futures market
The futures market is a high-risk market, and preventing risks is the "lifeline" for the development of the futures market. Under the leadership of the party, China's futures market has always attached great importance to risk prevention and control for 30 years.
In 1993, the Session of the 14th Central Committee of the Communist Party of China clearly stated in the "Decision of the Central Committee of the Communist Party of China on Several Issues Concerning the Establishment of a Socialist Market Economy System" that "strictly regulate the pilot projects of a few commodity futures markets." In order to implement this requirement, the State Council successively issued the "Notice on Resolutely Stopping the Blind Development of the Futures Market", "Notice on Further Rectification and Regulation of the Futures Market", and "Interim Futures Market" in November 1993, August 1998, and June 1999. Regulations and other regulatory documents and administrative regulations provide legal guarantees for regulating the responsibilities and transaction behaviors of market entities and strengthening risk management.
In November 1993, the State Council authorized the China Securities Regulatory Commission as the administrative department for the futures market. In 1998, it was clear that the China Securities Regulatory Commission would conduct vertical management and centralized and unified supervision of the futures market. In December 2000, the China Futures Association was established, forming a regulatory system that combines the administrative supervision of the China Securities Regulatory Commission, the front-line supervision of exchanges and the self-regulation of the association. In 2006, the establishment of the futures market monitoring center realized a large concentration of futures market data, thereby establishing the "five-in-one" futures supervision work of the China Securities Regulatory Commission, local agencies, futures exchanges, China Futures Market Monitoring Center and China Futures Association mechanism. Among them, the establishment of a monitoring center is a major innovative arrangement of China's futures market supervision system. It has distinctive Chinese characteristics and originality on a global scale. It has been highly praised by international evaluation organizations and regulatory counterparts.
At the same time, under the leadership of the Party Committee of the China Securities Regulatory Commission, China’s futures market has explored the management model of "one account, one code" and unified real-name account opening. On the basis of the "one account, one code" system, it has developed a security deposit management monitoring system, warehouse system, account management, large account reporting system, etc., these systems have played an irreplaceable role in preventing market manipulation and preventing risks. Internationally, the unique "penetrating" supervision system of China's futures market has also received increasing attention. At the International Securities Regulatory Commission's organizational meeting in November 2017, representatives of the China Securities Regulatory Commission gave a special introduction to the "penetrating" regulatory system, which attracted great attention and praise from the participants. The stable operation of the futures market over the years also proves that this set of regulatory systems in our country is effective and can withstand the test of the market. It can be seen that the leadership of the party has ensured the rapid and steady development of the futures market.
the party's leadership escorts a new journey of high-quality development of the futures market
The 30-year development of China’s futures market has vividly proved that the leadership of the party is the fundamental guarantee for the development of the futures market. It is with the strong leadership of the party that China's futures market has overcome numerous difficulties, achieved standardized development, and played a major role.
The Session of the Nineteenth Central Committee of the Communist Party of China described the grand blueprint for economic and social development during the "14th Five-Year Plan" period, and also put forward new and higher requirements on the futures market. After 30 years of accumulation, the foundation and conditions for the high-quality development of the futures market are constantly being formed and consolidated. The real economy has huge potential, the overall macro environment is improving, and the new advantages of international cooperation and competition continue to increase. China’s futures market is in a rare strategic development opportunity. period. To adapt to the new development stage, implement the new development concept, and build a new development pattern, it is necessary to take advantage of the trend and take the new journey of high-quality development. It is necessary to adhere to and strengthen the party's leadership of the futures market.
Strengthen the leadership of the party
Further enhance the "four consciousnesses", strengthen the "four self-confidence", achieve "two safeguards", give play to the leadership role of the party organization, set the direction, manage the overall situation, promote implementation, and adhere to Xi Jinping's new era of socialism with Chinese characteristics. In-depth study and implementation of the spirit of the Fifth Plenary Session of the 19th Central Committee of the Communist Party of China and the Central Economic Work Conference, based on the "two overall situations", more consciously stand in the new development stage, implement the new development concept, integrate into the new development pattern, and closely focus on the Securities Regulatory Commission It will build the general goal of a standardized, transparent, open, dynamic and resilient capital market, adhere to the general tone of the work of seeking progress while maintaining stability, and promote various tasks based on its own reality.
Do a good job in party building
Further strengthen the education of ideals and beliefs, insist on administering the party strictly in an all-round way, persevere in discipline, strengthen party spirit education, strengthen discipline education, strengthen the construction of party style and clean government, and continuously increase the creativity, cohesion, and combat effectiveness of party organizations. The model enables the majority of party members to give full play to their vanguard role and provide a strong political guarantee for doing a good job and promoting the development of the futures market.
Strengthen work planning
Further enhance political awareness, improve political positions, attach importance to thinking and planning their own work from a political perspective, be good at observing and analyzing industry development issues with a political perspective, and earnestly implement the Party Central Committee's decision-making and deployment into their own work; improve professionalism, strive to become an expert in leading the construction of a new development pattern, enhance the sense of urgency to recharge the lessons, learn what to do, and make up for what is lacking, and consciously catch up with the trend of the times.