May 12, 2014
By Ruan Xiaoqin
The State Council’s Opinions on Further Promoting the Healthy Development of the Capital Market (the “9 New Opinions” for short) is another programmatic document on comprehensively deepening the capital market reform at the time of China’s new round of reform and opening-up. With regard to the construction and development of the futures market, the “9 New Opinions” specifies that the futures market construction should be promoted, the commodity futures market should be developed, and the financial futures market should be built as well. And in terms of increasing the competitiveness of securities and futures services, the Opinions stresses that an open, transparent, and orderly license management system of securities and futures services should be implemented, the innovative development of intermediaries should be promoted, and the orderly development of securities and futures internet business lines should be guided as well.
The Shanghai Futures Exchange (SHFE) said that the “9 New Opinions” has provided more spacious room for the accelerated development of the futures market, and full implementation of the “9 New Opinions” will be of great significance for the various deployments of the reform and opening-up of the futures market, the further display of the futures market’s functions in price-finding and risk management, and the enhancement of the futures market’s ability of serving the real economy.
First, the futures market will have a more prominent role in China’s socialist market economy system. The steady promotion of the product innovation of futures market will help to further bring off the market’s decisive role in resources allocation, thus providing basic conditions for an effective resources allocation.
Second, the futures market’s ability of serving the industry will be further enhanced. Along with the enriching of product variety in the futures market and the increase of its operation efficiency, enterprises can conduct risk management in exchange rate, interest rate, and raw materials by using the futures market and realize the full connection of the spot trading and the futures derivatives’ risk management market. And the combination of virtual economy and real economy can effectively resist price risks and increase competitiveness.
Third, the “9 New Opinions” allows qualified institutional investors to participate in the futures market and cancel the unnecessary limitations on enterprises’ application of risk management, which will further optimize the investor structure and promote the display of the futures market’s functions. Finally, the initiative and the independent innovation of all participants in the futures market will be further stimulated. The “9 New Opinions” demands to relax the restrictions on the business access of securities and futures operation agencies and to support intermediaries’ innovative development. Decentralizing more rights to the market will enable the futures market to adapt to the changing and newly-emerging demands; continuously developing more products and optimizing relevant systems will contribute to realizing the positive interaction between supply and demand and enhancing the vigor and impetus for the sustainable development of the market.
The SHFE said that directed by the “9 New Opinions” and the principle of marketization, legalization and internationalization, it will continue to realize transformation development driven by innovation. In terms of product transformation, it will keep improving the development of four major fundamental product series, including nonferrous metals, ferrous metals, precious metals, and energy and chemicals, promote commodity index futures, options and other derivatives, and speed up the development and listing of crude oil futures.
Source: Shanghai Securities News
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