(Yicai Global) Sept. 9 -- The importance of China’s opening-up process was discussed at the 2022 China Zhengzhou International Futures Forum, which was held online from Sept. 6 to yesterday. 

China has steadily promoted the high-level institutional opening of the futures market in recent years, with enhanced its ability to serve the real economy, Wang Xiaoming, deputy general manager of the Zhengzhou Commodity Exchange, said at the opening-up sub-forum on Sept. 7, adding that nine commodities including pure terephthalic acid, crude oil and palm oil have been opened to foreign investors. 

The international influence of these products has increased, and the ‘China price’ in the futures market has gained more attention worldwide, Wang said, noting that further opening-up is necessary for China to improve its core competitiveness in the futures market.

More Influential

China is one of the world’s major producers and consumers of commodities. It has also been the world’s largest commodity futures market for many years. The trading volume of commodity futures in China totaled 2.978 billion lots in the first half, accounting for 69 percent of the global total.

As of June, the nine international futures and options products in China had become important pricing references in cross-border trade. Internationalized products can now be picked up overseas, which is conducive to promoting trade integration among countries and regions.

In addition, China’s exchanges are promoting the market participation of Qualified Foreign Institutional Investors and RMB Qualified Foreign Institutional Investors in commodity futures, commodity options and stock index options in accordance with the overall plan of the China Securities Regulatory Commission.

The exchanges continue to improve their supporting services for opening up in terms of technology, Wang Ying, vice director of the China Futures Association, said at the forum. Futures exchanges are also accelerating the pace of bringing in traders.

“With the growth of China’s futures market and derivatives market, foreign players are more interested in participating,” Wang added.

As of last month, a total of 23 futures firms had established 26 first-tier subsidiaries and 30 second-tier subsidiaries in overseas regions.

As the only futures exchange in the central and western regions of China, the Zhengzhou Commodity Exchange has put a particular emphasis on opening-up, said Wang Xiaoming, adding that the exchange listed PTA as a futures product to attract overseas traders in 2018.

By June, the exchange had foreign traders from over 20 countries and regions including the United Kingdom, South Korea, Singapore and New Zealand, and foreign traders hold about 120,000 lots of PTA futures positions on an average daily basis, with a cumulative trading volume of 33.79 million lots.

The Zhengzhou Commodity Exchange will have more products for global investors in the near future, he predicted.

More Cooperative, More International

The Baltic Exchange, a subsidiary of the Singapore Exchange, has signed a memorandum of understanding with the Zhengzhou Commodity Exchange to jointly explore the research and development of shipping derivatives, said Pol de Win, executive vice president of the Singapore bourse.

In addition, the Singapore Exchange has established exchange-traded fund cooperation with the Shenzhen Stock Exchange and teamed up with a wholly owned subsidiary of the Shanghai exchange in a bid to strengthen the connection between the capital markets of the two countries.

Global market participants have grappled with ongoing uncertainties and volatilities in the past few years and the environmental, social and governance sector will be more important in the derivatives market in the future, Bill Herder, Asia-Pacific president of the Futures Industry Association, said at the forum.

The derivatives markets at exchanges are the best place for such products to be traded efficiently and transparently, he said.

China’s Futures and Derivatives Law came into effect on Aug. 1, and it will have a positive effect on the derivatives industry, Herder noted. The introduction of the law has largely dispelled the compliance concerns of foreign investors participating in China’s futures market trading, according to Wang Ying.

Editors: Shi Yi, Tom Litting