Economic Daily: Futures Listing Mechanism Will Be Improved

Updated on: May 26, 2016

Reported by He Chuan, Journalist from Economic Daily

Economic Daily, Shanghai May 25 - At the Shanghai Derivatives Market Forum held today, Fang Xinghai, Vice President of CSRC, says that China will face good opportunities for establishing a pricing center for bulk commodities; China will further improve its futures listing mechanism to attract the participation of domestic enterprises and financial institutions and improve the global presence and influence of domestic futures market.

So far, after the development of more than two decades, the domestic commodity futures listed over 46 varieties, covering the main industries such as agricultural products, metals, energy, chemical and other fields. The positive role of Chinese commodity futures market has been increasing in terms of discovering prices, managing risks and promoting economic transition.

According to Fang Xinghai, China has been the largest consumer of most bulk commodities, therefore it is of great significance to establish an international pricing center of bulk commodities in China. Currently, the prices of most bulk commodities are determined on the basis of futures markets, while previously there were determined by manufacturers and merchants. As long as the pricing center is in China, Chinese enterprises and investors will have a better understanding of price trends and take arbitrage measures in advance.

Fang introduced that CSRC will improve the market demand-oriented futures listing mechanism and develop more new futures products conforming to the needs of substantial economy, including the futures products and commodity options for bulk commodities such as crude oil.

So far, domestic commercial banks can perform the futures trading for gold and silver only and they cannot perform the futures trading for other bulk commodities. However, the corporate customers and some high-net value individual customers of these banks have strong demands on hedging risks and performing asset allocation by using commodity futures. On the premise of controllable risks, CSRC will research the ways of promoting commercial banks and other relevant financial institutions to enter the commodity futures market in an orderly manner. In addition, it will keep canceling some policies and restrictions to encourage and support industrial enterprises to perform hedging and manage risks by using the futures market.

For recent increased fluctuations in the market of bulk commodities, Fang Xinghai says that CSRC has instructed commodity futures exchanges to take comprehensive risk control measures such as increasing cash deposits and commission charges and properly limiting positions, which have achieved remarkable achievements. Next all commodity futures exchanges will pay attention to market conditions, increase the degrees for supervision and law enforcement, and strictly fight against violations and illegal behaviors.