Source: www.hexun.com

 

On July 17, Liu Nengyuan, President & CEO of Shanghai Future Exchange (SHFE) attended SHFE’s training on hedging, the first activity of the series program “Serving the Industry” and gave a speech.

 

Mr. Liu walked the attendants through how the continuous trading worked since its launch over a week ago. The market worked well since the launch of gold and silver futures continuous trading on July 5, which significantly improves price continuity and market liquidity. As of the closing on July 5, the trading volume of gold futures during continuous trading amounted to 1,866,800, accounting for 66.53% of the total trading volume of gold futures during the period, while that of silver futures stood at 6,915,600, accounting for 51.29% of the total trading volume of silver futures during the period.

 

Futures and derivatives markets are integral parts to the capital market. To make innovations in these markets and give full play to their potentials will help promote the healthy development of real economy and relevant industries and companies. Only by understanding the dynamics of demand and supply, especially seeing the market’s next move, can companies make the right operational decisions. The existence and improvement of the futures market enables companies to foresee demand and supply information to make more scientific and reasonable decisions, so as to arrange production according to demand. And it provides companies with an effective tool, namely, hedging, to avoid price risks. Hedging allows companies to improve economic performance and predict procurement and sales costs, so as to ensure profits. However, there is a gap between the strength of China’s nascent futures and derivatives markets, and the needs of real economy. To narrow the gap, exchanges should spare no efforts to innovate and serve real economy. Also essential in the process is the cooperation and support of futures firms, institutional clients and other market participants. Only with such concerted efforts can the futures market better drive the development of real economy, said Liu.

 

To survive and growth, futures market should always serve real economy. Futures firms are forces that push the development of futures market and a channel that serves real economy. So there is a symbiosis between exchanges and futures firms. Exchanges will work with future firms and industrial institutional clients to explore new ways and tools to serve real economy, added Liu.

 

The training is part of “Serving the Industry”, a training program launched by SHFE this year. Designed as a platform to enhance communication with futures firms and industrial institutional clients, the training series covers theoretical training, project investigation and study and comprehensive services. Such events will be designed more systematically and held regularly to facilitate exchange of ideas. This year, SHFE puts greater efforts into holding larger scale and more frequent market events jointly with futures firms. It has launched projects supporting futures firms’ field study at plants, and carried out a comprehensive training program on business practices, technology innovation, risk management and many other topics.

 

A total of 220 representatives from 105 futures firms and industrial companies attended the training, where experts from SHFE, futures firms and accounting firms introduced hedging rules and procedures, and relevant topics such as risk control system, bookkeeping and system building.