More financial institutions are using commodity indices for wealth management, and financial products linked to commodity indices are also showing a full-scale trend. Recently, at the symposium on the commodity index business of the Dalian Commodity Exchange (Abbr.DCE.), various financial institutions have focused on the products linked to the commodity index.
Bank structured deposits consist of deposits and China Minsheng Bankng Corp.Ltd(Abbr.CMSB) said at the meeting that commodity index products have broad application prospects. In 2018, CMSB began to explore the development of structured products linked to commodity prices, initially linked to crude oil, gold, soybeans, etc. On domestic exchanges, and subsequently developed products linked to the iron ore index, which was recognized by market investors.
Products linked to the Commodity Index can solve some problems for products linked to a single futures contract. When CMSB launched the structured deposit products linked to soybean futures in 2018, it encountered the problem that the future main contract was about to expire rather than the lack of liquidity of the main contract. Products linked to the Commodity Index can circumvent the above problems, and the target is no longer limited by the duration of the main contract, and does not require frequent changes.
A floating income certificate regards a securities company as the issuer, which is a financing instrument issued by a securities company to a qualified investor in a private placement manner. This certificate is a kind of security that stipulates the principal and repays the proceeds associated with the specific subject. The guaranteed-type floating income certificate is a principal-protected product, which reflected in the liabilities of the securities company’s balance sheet, and represented the credit of the securities company. For the flexibility, the term of the certificate and the voucher target can be customized according to customer needs. Securities personnel also stressed that the linked commodity index can mitigate the risk and improve the accuracy of the volatility estimate.
The commodity index futures asset management plan is a special household product. According to the personnel of the futures asset management business, the futures asset management plan linked agricultural product futures price index issued by the futures company mainly achieves the tracking target index by holding the corresponding futures contract of DEC. Investors can achieve the purpose of agricultural product asset allocation and resistance to inflation risks.
Commodity index type insurance products use commodity index to design insurance products, which can meet the insurance needs of entities through index customization and product design innovation. The insurance company took the pig breeding industry as an example and introduced the company's product design ideas. There are three major pain points in pig breeding enterprises: disease epidemics, falling pork prices, rising feed costs. In the view of rising feed costs, Insurance companies have provided the custom pig feed cost futures index for the DEC., then use the index to combine diversified options and insurance plans to meet the different needs of pig breeding companies, eventually diversify farmers' feed cost risks.
It is understood that DCE. has started research on commodity index since 2003. In recent years, in order to actively respond to the market index of commodity investment demand, promote the market's diversified open transformation and development, the DCE. have done and promoted a lot of work for index research and development, index application. At present, DCE. has publicly released 37 commodity futures indices and 2 spot indices, including comprehensive, composition, theme and single commodity index, which basically covers agricultural products and industrial products that have been all listed types. With the cooperation of various market institutions, 13 products have been promoted to issue which is based on bank structured deposits, brokerage income certificates, futures asset management plans and commodity index swap. In addition, DCE. has cooperated with 20 public funds to promote the commodity index fund business, involving the development of 28 fund products. Thereinto, agricultural products, soybean meal, iron ore, black, chemical and other index products that are highly concerned by the market.