FUTURES DAILY: THE SHFE DECIDES WORK EMPHASIS OF NEXT STAGE

Updated on Jun 18,2014

June 18, 2014

By Zhang Fan

Lately, the Shanghai Futures Exchange (SHFE) released the “Concentrated Reply to Opinions and Suggestions at the 2014 Regional Members Symposium” through its member service system, which has answered the questions concerned by members and investors and introduced the work emphasis and the business development direction of the SHFE in the next stage from three aspects of improving market functions and institutional system, constructing a good environment favoring the development of the market and the industry, and focusing on innovative development and opening-up.

The SHFE pointed out, in response to members’ questions on product innovation, business innovation, institutional innovation, policy interpretation, process optimization, and technology upgrading, that:

The first is to, according to the development situation and strategic planning of the market, keep promoting the serialization and diversity of products and refine the listed products. For example, the SHFE plans to refer to the mature practices of overseas markets, study spread trading and other forms, and further enhance the continuity of gold contracts and others in brisk months; and it will also actively explore the feasibility of listing imported No. 20 standard rubber for trading.

The second is to pay great attention to the service and covering capacity of the industry and keep deepening and expanding the width and depth of serving the national economy. For example, the SHFE will research the setting up of warehouses in other areas and the premiums and discounts of warehouses in other areas, and it will adopt various measures to reduce the trading cost and the capital occupation cost of industry customers.

The third is to keep improving the futures market’s operational mechanism, trading platform, and institutional construction, and acting on international conventions in concepts, systems, rules, services, risk control, and technologies. For example, the SHFE will continuously trace the fluctuation ratio of listed contracts and the margin adjustment in the international market, analyze the market risks comprehensively, and adjust the margin level appropriately under sharp market fluctuations; it will also continue to exploit the potentialities of the single-side larger-amount margin system, and make research in cross-product offset, options and futures offset, and other measures; and it will further research and improve the system of offsetting margin with negotiable securities.

With regard to the problems raised by the members on member services, investor education, market construction, and publicity, the SHFE made the following reply. First, it will strengthen the services and support for members, explore to set up a market service center, and organize 500-600 market promotion meetings and 50-70 in-factory investigations in cooperation with all members in this year. Second, it will intensify the efforts on cultivating industry talents to enhance its industrial service capacity. Third, it will also intensify investor education to promote the establishment and operation of a long-term mechanism, such as organizing the branded investor education activities like the “Futures Lecture Hall” and the “Serving the Industry” and holding the “Monthly Forum of Shanghai Commodity Futures”. Fourth, it will build a good market environment, lead innovative development, and enhance the image and influence of the industry by publicizing the futures market’s functions through mainstream media.

In terms of such problems as derivatives development, market opening-up, strategic development, and industrial innovation, the SHFE pointed out the following aspects in its reply. First, it will actively develop the derivatives business of commodity futures, such as promoting the preparatory work of listing the IMCI (Industrial Metal Commodity Index) futures of the SHFE and meanwhile facilitating and supporting financial institutions’ innovative products development with IMCI futures as the target. Second, it will optimize investor structure. For example, it will conduct strategic cooperation with financial institutions (including banks), government offices, and industry associations, implementing the cooperation content in terms of product innovation, project research, market activities, and industrial services, and increasing the width and depth of market services; it will also organize the brand activity of “Walking together with Institutional Investors” to provide institutional investors and professional investors with a information exchange platform. Third, it will seize the opportunity to implement the opening-up strategy and accelerate the pace of being integrated into the international market. Fourth, it will actively handle industry reform and encourage and guide innovative development. For example, it will prepare for the listing of crude oil futures, usher in overseas investors, and promote the early opening-up of qualified products.

It is learnt that the concentrated reply to members’ opinions and suggestions is the second one that the SHFE held after it began to conduct large-scale and efficient communication with member units in the form of Regional Members Symposium in 2013. On February 11 and 12, 2014, the SHFE held the “Regional Members Symposium” in Chengdu, Shenzhen, Hangzhou, Beijing, Shanghai, Nanjing, and Wuhan respectively and, among all 157 futures company members and 49 non-futures company members, 189 have attended the symposium, about 91.7% of the total.