1.China futures market has achieved some wonderful process already:
Since 18th CPC National Congress, the opening-up of China's futures market has made new achievements. Firstly, the bonded delivery pilot launched in full swing. On the basis of the lead in the copper and aluminum futures bonded delivery pilot, DCE, ZCE have been carried out in LLDPE, methanol, iron ore futures bonded delivery pilot, which lays a solid foundation for the introduction of foreign investors. Second, the introduction of foreign investors made significant progress. We make full use of the opportune moment and pay close attention to promoting the listing of crude oil futures. At present, the preparations for crude oil listing have entered the final stage. Thirdly, with overseas securities and futures market institutions to achieve new breakthroughs in equity cooperation. CICC, SSE and SZSE jointly bid for 30% stake in the Pakistan stock exchange, becoming its largest single shareholder. CICC, SSE and the German stock exchange established a joint venture of Frankfurt central exchange, and on-line the first derivatives of CSI 300 index ETF futures contract. Some Futures Company purchase overseas futures business institutions and become the settlement members of major international exchanges. Through efforts, the international influence of China's futures market has been increasing, and some mature varieties, such as copper, PTA, iron ore futures, and so on, have become an important pricing reference for domestic and foreign trade.
2.Need to acknowledge the opening up of futures market in a national strategy view:
Mr. President Xi Jingping has repeatedly emphasis the need to develop an open economy at a higher level. In the meeting of Leading Group for Central Comprehensive Deepening Reform in August 29th, President Xi called for to plan at a higher starting point and to further promote reform. As for my personal understanding, this higher starting point start with china’s unprecedented closeness to the center of global platform, and the great rejuvenation of China is hitherto unknowingly becoming clearer in front of us. However, what companies the development of our county is sever international competition which also entered into an unprecedented area. As quoted from some from other country, for global economic history, the most impressive event for the past 30 or 40 years is the integration of Chinese manufacturing industry into the world economy. And next decade or two will witness integration of Chinese Financial Industry into world economy. It is so true as China has the largest saving in the world. China’s global financial status today is as USA a century ago. We must seize such a chance for a millennium, to prepare and plot for the opening of financial industry, and contribute to the great rejuvenation of China by supporting economic development and grand diplomatic service.
Futures market guides the circulation and allocation of resources such as commodities and capitals on the global scale through futures prices, which is the most prominent characteristic of globalized financial market. Futures market shall play a important role in promoting financial opening of our country. As history showed to us, well-developed financial system is crucial support for the development of a high level and open economy. In general, the level of development and internationalization of Chinses futures market is far from enough as compared to the needs of pricing and risk management of economies with higher opening grade.
From the perspective of serving risk management need of real economy, since 2013, china has maintained its dominant position of import and export by volume. It has been ranked as the world largest exporter of goods and the second largest importer for eight consecutive years. Since 2014, China’s actual foreign investment has surpassed its scale of foreign capital utilization. Although internationalization of China’s futures market has achieved some progress,, it does not match with the level of openness of the real economy，and cannot effectively meet the needs of the risk management of the open economy.
From the point of view of commodity pricing mechanism, pricing of major commodities of the world have been dominated by traditional producers and merchandises is gradually shifting to future market with various concerned parties’ involvement. In the world trading system, China’s voice is still very weak. Commodities futures’ trading volume of China has been ranked first in the world. However, there is no sufficient number of oversea industrial and institutional investor participants, which does not entitle enough authority for pricing. For an economy with higher level of openness certainly demands higher requirements of openness of its futures market.
By looking at the outlook of futures industry, Chinese domestic market is huge, whereas the global market is much bigger. For a greater development, we must advance towards the world.
3. Gradually promote the opening up of futures market in the future
China Securities Regulatory Commission Vice Chairman Fang Xinghai September 8 at 2017 China (Zhengzhou) International Futures Forum, said the recent convening of the National Financial Work Conference, including the futures market, including the financial industry has made a clear deployment. Efforts should be made to build a futures and derivatives market that is compatible with economic and social development and is compatible with real economic risk management needs.
Fang Xinghai said that the following should do the following work.
First, accelerate the introduction of foreign investors to the pace of crude oil futures as China's futures market, a comprehensive opening to the outside world and the pilot, and steadily promote the listing of crude oil futures work actively promote the maturity of iron ore and other commodity futures to introduce foreign investors, To encourage more qualified foreign investors to participate in domestic commodity futures trading.At the same time, actively study the introduction of financial futures overseas investors program for China's economic and financial markets to provide a more diversified risk management tools.Currently, international investors to participate in China Futures market enthusiasm is very high, we have to take advantage of this opportunity.
The second is to expand the territory of domestic and foreign delivery and the relevant ministries to strengthen communication and coordination to expand the bonded delivery varieties and scope, continue to promote the improvement of tax and other supporting policies to promote the normalization of bonded delivery to adapt to the relevant international demand for futures, Set up warehouses and offices to provide rich and convenient cross-border pricing and risk management services for entities.
The third is to carry out flexible and diverse foreign cooperation, focusing on 'countries along the way' along the country and region to support the exchange with its own characteristics and advantages, the comprehensive use of equity, products, business and other forms of cooperation with foreign exchanges. Exchange-rich product line, to play the positive role of China-EU exchanges for foreign investors to provide China's relevant asset risk management tools.
Fourth, to encourage the futures industry to international development.To support the futures business institutions in the establishment of overseas, the acquisition of the company, the introduction of foreign shareholders, and actively carry out cross-border business.Currently, China's futures business has set up 20 subsidiaries outside the futures business Business, foreign financial institutions to participate in China's futures companies 2. In the future to attract more internationalization of high shareholders to participate in futures companies to enhance China's futures company's international genes.
Fifth, strengthen the cross-border supervision and cooperation with foreign regulatory agencies to expand the futures market open to the outside world, must be effective supervision as a prerequisite, or likely to lead to market risk in the strengthening of domestic market supervision, but also to improve with foreign regulatory agencies cross-border Supervision and cooperation of the institutional arrangements to strengthen the operation of monitoring and risk prevention and control cooperation, especially in the extreme state of the regulatory cooperation for the futures market to create a favorable environment for opening up.For the important financial products related to our derivatives, we have no intention Monopoly of its market, foreign exchange to launch some of these products, contribute to China's economic development, but we want to ensure that the main liquidity of such products remain in the territory, foreign transactions can not affect the stability of the domestic financial markets.
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