Xinhua News Agency: Fang Xinghai: Futher Improve Future Products Listing Mechanism

Updated on: May 25, 2016

Reported by Chen Yunfu, Journalist from Xinhua News Agency

Xinhua News Agency, Shanghai May 25 - Fang Xinghai, Vice President of CSRC, says that the construction of Chinese commodity pricing center is facing good opportunities; it will further improve the futures products listing mechanism, promote two-way opening of market, attract domestic enterprises and financial institutions to participate in the transaction, and improve the domestic futures market internationalization and influence.

This is what Fang Xinghai says at the Shanghai Derivatives Market Forum on May 25. He says that the market plays a decisive role in the allocation of resources through price. The price not only refers to the prices of the spot price, but includes futures prices, and the importance of futures prices in the allocation of resources is not lower than the spot prices; the spot price takes effect primarily on current consumption, while the futures price commands the production and investment that decide the future supply.

After 20 years of development, China's commodity futures market is playing increasingly apparent and active role in the discovery of prices, management of risk and promotion of economic transformation, etc. At present, the domestic commodity futures listed over 46 varieties, covering the main industries such as agricultural products, metals, energy, chemical and other fields. Along with the transaction volume growth and improvement of regulation, the domestic market international influence is expanding, and foreign-funded companies’ futures positions in some mature future varieties accounted for more than 10%.

Fang Xinghai says, the next step will focus on reforming and improving the market demand-oriented futures products listing mechanism, listing more products and making strict and effective supervision, including the introduction of crude oil and other commodity futures and commodity options. What’s more, promote two-way opening-up of market, focus on attracting foreign investors, and attract domestic enterprises and financial institutions to participate in the commodity futures trading, and build an open, inclusive, competitive and cooperative futures market.

Fang Xinghai says that currently domestic commercial banks can only participate in the gold and silver futures trading, but can not carry out other commodity futures trading. However, the bank's corporate clients and high net worth individuals have high demands for hedging risks and making asset allocation by commodity futures. Some domestic commercial banks choose to engage in futures or OTC derivatives business outside of China, and the cost and risk of this path are higher.

For the recent commodity market volatility, Fang Xinghai also says that CSRC has been guiding the commodity futures exchanges to take comprehensive risk prevention and control measures such as raising the deposit and fees, making proper position limits and strengthening the risk control responsibility of futures companies, which have achieved remarkable results. Next, the commodity futures exchanges will continue to pay close attention to the operation of the market, intensify supervision and law enforcement, and crack down on illegal activities.