FangQuant › Commodities Futures
Fang Xinghai, vice chairman of the China Securities Regulatory Commission, stated at the "2020 Qingdao China Fortune Forum" recently that the China Securities Regulatory Commission will work with relevant departments to further promote the asset allocation in the commodity futures market of domestic banks, securities, insurance, public funds, pension funds and other institutional investors and the development of the wealth management market in the commodity sector.
Fang Xinghai introduced that, compared with the international market, although China’s bulk commodity market development and investment started late, after years of reform and development, it has also played an active role in the field of asset allocation and wealth management.
First, the product system and market scale of the commodity futures market continue to expand, which has consolidated the investment foundation for asset allocation and wealth management. At present, there are 78 commodity futures and options listed in China, which basically cover important areas of the national economy such as agricultural products, metals, energy, and chemicals. Investor participation and market activity continue to increase. In terms of the number of transactions, since 2009, China has become the world's largest on-exchange commodity derivatives market. The domestic commodity futures market has provided investors with important hedging methods and investment opportunities in the environment of rapid volatility in the global financial market.
Second, the risk management function of the bulk commodity futures market continued to play. The breadth and depth of domestic enterprises' participation in commodity futures investment has continued to expand, and the demand for risk hedging investment has been effectively met.
Third, the relevant channels for various investors to participate in commodity investment have been continuously expanded. At present, China has 57 public offering funds investing in commodities, with a scale of 48 billion yuan. In the field of private equity funds, the scale of trading margin invested in futures and other derivatives reached 77.763 billion yuan, an increase of 56.32% from the end of last year.
Fourth, a breakthrough was made in the opening of the bulk commodity futures market. Since 2018, China has successively opened up to the outside world five specific futures varieties, including crude oil, iron ore, PTA, TSR20, and low-sulfur fuel oil. On the whole, foreign investors participated actively and the market was operating in an orderly manner. The function of futures price discovery and hedging has been significantly improved, which has achieved a good beginning for the opening up of China's futures market.
Fang Xinghai mentioned that there are still deficiencies in current commodity investment in residents' wealth management. For example, China has not yet listed commodity index futures products, and the number of commodity options is relatively small, and its functions need to be improved. The development of commodity index funds and commodity index ETF markets has just started, and their proportion in asset management products is still small. The investment and management capabilities of financial institutions' commodity assets need to be improved.
Fang Xinghai believes that under the new situation, commodity futures investment should play a more active role in helping "the country strengthen the people's prosperity", and help form a new development pattern of "domestic cycle as the main body, domestic and international dual cycle mutual promotion". To promote the development of the wealth management market in the bulk commodity sector, we need to focus on the following aspects in the future.
One is to further enrich products and provide more high-quality products for wealth management. Rich and diversified investment tools and products are the foundation for the development of the wealth management market in the bulk commodity sector. China's commodity derivatives market still has great potential to be tapped. In the next step, we must continue to improve the construction of the futures product system and accelerate the development and listing of commodity indices and more commodity futures options and support relevant institutions to develop more investment products such as commodity index funds and commodity index ETFs.
The second is to further unblock the channels for investors in the commodity market to manage wealth. We encourage all types of wealth management institutions to further broaden the allocation channels of commodity assets to meet the needs of investors in all directions and from multiple perspectives while meeting the requirements of risk prevention and compliance.
The third is to promote greater opening up of the futures market and build a new global wealth management landscape. Gradually internationalize qualified commodity futures and options varieties, connect with international practices, and take advantage of China's super-large market to attract more foreign investors to participate in the domestic commodity futures market for trading, risk management and asset allocation. Improve the global pricing influence of China's commodity futures, and improve the renminbi commodity pricing and settlement system for the globalization of wealth management.
The fourth is to strengthen supervision and improve the governance capabilities of wealth management institutions. Effectively exert the effectiveness of supervision, accelerate the construction of the over-the-counter derivatives transaction report database, do a good job in risk analysis and judgment, and strengthen the review of products involving a wide range of customers and high risk volatility. We urge wealth management institutions to stick to the bottom line of compliant operations, improve risk control indicators, strengthen investor suitability management, and firmly hold the bottom line of avoiding systemic risks.
Fifth, continue to do a good job in investor publicity and education. "Business development, investment education first." For a long time, the public in our country did not know much about commodity investment or the commodity futures market, and investor publicity and education work has a long way to go.
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