(Yicai) Sept. 15 -- The Chinese futures market has made significant progress in recent years in opening-up more categories of products to overseas traders, giving China more sway on international pricing, Yicai learned at a recent forum.
China’s futures market continues to expand the breadth and depth of its opening-up to foreign investors, Yu Xuanfeng, deputy general manager at Zhengzhou Commodity Exchange, said at the China (Zhengzhou) International Futures Forum held from Sept. 7 to Sept. 8.
There are now 46 commodity futures, stock index futures and options across 24 categories that Qualified Foreign Institutional Investors, which are foreign investors licensed to buy Chinese yuan-denominated stocks on the mainland, and Renminbi Qualified Foreign Institutional Investors, which are overseas investors qualified to invest directly in the mainland bond and equity markets, can invest in.
As the number of categories increases, there has been a notable jump in overseas investors. For instance, more than 60 QFIIs and RQFIIs from 23 nations and regions trade on the Zhengzhou Commodity Exchange.
The pricing of Chinese futures is having a greater influence on pricing worldwide as the “China price” becomes more widely applied in global markets. Major categories, such as crude oil and pure terephthalic acid futures, have become an important benchmark for the pricing of cross-border trade.
Moreover, intermediate product futures that are publicly traded in China have attracted a great deal of attention from international markets, and overseas exchanges are actively seeking collaborations with China’s futures exchanges, Yu said.
Global economies are becoming increasingly interconnected and their internationalization is gradually intensifying, said Erlend Engelstad, senior executive of Deutsche Börse, operator of the Frankfurt Stock Exchange. The international trading of commodities is shifting to the Asian markets, making China’s commodities more influential.
With the growth and further opening-up of China’s derivatives market, CME Group, which is the world’s largest operator of financial derivatives exchanges, is dedicated to collaborating with participants in the Chinese market as well as to explore and tap the Chinese derivatives market’s potential for long-term growth, said Russell Beattie, managing director and head of Asia Pacific at the Chicago-based firm.
The Zhengzhou Commodity Exchange has been integrating itself into global markets in an active and open-minded manner ever since it was first established. Its Purified Terephthalic Acid futures began to accept overseas traders from December 2018.
In January, the exchange also opened up the trading of rapeseed oil, canola meal and peanut futures and options to international investors. So far, seven commodity futures and options can be traded by foreign investors. This also helps mainland companies to better manage risks when hedging against two markets and two different kinds of resources.
Last year, the Zhengzhou Commodity Exchange opened up nine categories of commodity futures and options, including PTA, methanol and white sugar, to QFIIs and RQFIIs, to further expand the channels of participation for overseas traders.
The Zhengzhou Commodity Exchange has 574 accounts held by foreign traders from 22 countries and regions such as Singapore, the UK, New Zealand and South Korea. These include overseas companies that are engaged in the energy, chemicals, oilseed and sugar fields.
The China Securities Regulatory Commission will launch more categories to steadily expand the investment scope of QFIIs and RQFIIs, deepen ties between exchanges on cross-border businesses in order to actively explore more diversified paths for opening-up while keeping risks controllable , said Fang Xinghai, vice chairman of the commission.
Institutions and regulations on opening-up also need to be optimized and improved, Fang said, adding the securities regulator will continue to enhance and stabilize market expectations, so as to offer an environment that is more convenient and friendly to overseas clients participating in the Chinese futures market.
In addition, cross-border regulation and cooperation needs to be strengthened, in order to guarantee the secure and stable operation of the overall futures market, he added.
Editor: Kim Taylor