The 11th Shanghai Derivatives Market Forum was held in Shanghai from May 28th to 29th, 2014. Jointly organized by the Shanghai Futures Exchange and China Financial Futures Exchange, this forum was centering around the theme of “Prospects and Pursuit of a Liberalized, Legally-governed and International Market”. The vice-chairman of the CSRC Jiang Yang attended this forum and delivered his speech.
What Jiang Yang pointed out in his speech during the morning session was that recently the State Council released the Several Opinions on Promoting the Sound Development of Capital Market, which not only provides the top-layer design for capital market reform and development, but also a strategic plan for facilitating the construction of futures market, having profound implications for gaining consensus on reform across the market, identifying the development direction and jointly enhancing the function of futures market to better serve the real economy.
According to Jiang Yang, the newer and older versions of Nine Opinions were actually launched in a decade apart. During this decade, CSRC has positively pressed forward the reform and innovation of futures market, made rapid progress in the market construction and completed the product system on the whole so as to achieve vigorous growth of market scale, continuous upgrade of performance quality, gradually exerting of market functions as well as constantly enhancing global influence. In short, these can be manifested as follows: firstly, achieving thriving innovation in futures products; secondly, continuously improving the legal system of the market; thirdly, completing the market regulatory framework on the whole; and finally, gradually enhancing the capability of futures market to serve the real economy.
In the next step, Jiang Yang added that CSRC will, jointly with all stakeholders of futures market, deeply study, earnestly understand and conscientiously implement the essence of the Opinions issued by the State Council, intensify the exploring in futures market and strive to optimize the structure of the market system by adhering to the reform orientation of a Liberalized, Legally-governed and International Market, respecting the law of market development and giving play to the pioneering spirit of the market, in order to facilitate the coordinated development of markets both on and off the exchange and build up a competitive futures and derivatives market that matches well with the degree to which development of China’s economy and finance has achieved, and also adapts to the needs of risk management.
First of all, great efforts shall be mad to promote the innovation and development of the market. We will make steady headway in building up the internationalized crude oil futures market and strive to launch the oil futures by the end of this year. We will continue to launch other commodities futures products to support the reform in the resource products pricing mechanism, which include the R&D of new trading tools like commodity option, commodities index and carbon emission rights. Besides, we’ll actively expand the channels and mechanism of the futures market to serve the agriculture, famer and rural area by intensifying the research and development of those futures products favorable for the agriculture. We will also propel the research and development and listing of other government bond futures, stock index futures, cross currency futures and financial options in order to support the reform in interest rate liberalization and RMB exchange rate formation mechanism and adapt to the needs of capital market risk management.
Secondly, efforts shall be made to improve the investor structure. We will further improve the policies for securities and fund companies to participate in the futures trading, and press forward the formulation of the policies for banks, insurance companies, corporate annuity and social security funds to conduct the futures trading so as to offer more convenience for the entry of multifarious institutional investors to the market. We will strive to lift the unnecessary restrictions on the industrial enterprises and state-owned business to utilize the futures market for risk management, covering policies on credit and loan, accounting, audit and state-owned assets administration, so as to provide the enterprise with much better services in hedging.
Thirdly, efforts shall be made to further improve the market system. We will actively develop the derivatives OTC market while deepening the construction of floor trading market so as to facilitate both markets to supplement each other and achieve coordinated development. We will positively encourage those financial institutes and brick-and-mortar enterprises with sufficient risk tolerance to develop the derivatives in line with actual needs. We will promote the construction of OTC market service facilities, strengthen the infrastructure services such as trading report, data provision, quotation system and on-exchange centralized clearing, and explore the development of multi-tier commodities markets so as to satisfy the diversified needs of the real economy. We will actively boost the opening-up of the market, introduce the overseas investors to matured commodities futures products and gradually expand the scope of pilot running of futures bonded delivery.
Fourthly, efforts shall be made to strengthen the regulatory transition and law enforcement. Adhering to the direction of increasing market efficiency and service capability, we will further streamline administration and delegate power to the lower levels and make innovation in the regulatory model in order to enhance the credibility and transparency of the market. We will firmly hold the bottom line of preventing any systematic or regional risk from occurrence by strengthening the regulation of market operation, market risk monitoring and control as well as early warning, prevention and disposal mechanisms. We will also intensify cross-market and cross-border regulation, crack down market abuses such as market manipulation so as to enhance the efficiency and deterrence of law enforcement, safeguard the principles of openness, fairness and impartiality and protect the legitimate rights and interests of investors.
Finally, efforts shall be made to accelerate the legislation of the Futures Law. Dedicated legislation on futures will be the inevitable demand of satisfying the new trend of market development and upgrading the market development layers and level. Through this legislation on futures, we will not only summarize and solidify previous experience in development and regulation, but also lay a solid foundation for the future innovation and development of futures derivatives market. In the meantime, as a system engineering, this legislation on the Futures Law can’t do without the joint participation of all market players, regulatory authorities and government departments, and therefore CSRC will actively cooperate with NPC Financial and Economic Committee in this respect.
At the parallel law forum during the afternoon session, Jiang Yang also pointed out that it is imperative that the Futures Law be formulated as soon as possible because only by incorporating those well-established systems in the practice into the realm of law, can we ensure futures market to better serve the real economy, better protect the legitimate interests of investors, promote the opening-up of futures market and steadily develop derivatives OTC market. He hoped that this legislation leads to a fundamental law that can uniformly regulate futures, options and other derivatives markets, escalate the basic systems running effectively in the futures market into the provisions of law, improve the related system of futures market to serve the real economy, and enhance relevant rules and regulations covering disputes resolution, supervision, OTC derivatives trading and options trading, and so on.
Among those attending this forum were heads of state government departments and relevant industrial associations, representatives from overseas and domestic renowned financial institutes, corporate executives, experts and scholars, and media representatives.
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