.jpg)
The “2019 Iron & Steel Industry Chain Development Summit”, organized by Dalian Commodity Exchange (DCE) and others, is held in Hangzhou on October 26 to 27. DCE CEO Wang Fenghai says that the Chinese futures market has entered into a new era with diversified derivatives instruments and a direct and open environment. DCE will continue to strengthen efforts on intensifying market regulation, improving existing contract rules and systems and enhancing the market operation quality and the completeness of derivatives instruments, and keep providing industry enterprises with risk management channels and instruments, thus giving further play to the futures market’s capacity of serving the real economy.
Wang says that under the support of relevant parties in domestic and overseas markets, DCE’s iron ore futures has been in smooth and orderly operation, and its market functions have been effectively displayed since its listing. Its average daily trading volume(unilateral), trading turnover and open interests were 1.13 million contracts, RMB 522 trillion and 900,000 contracts respectively, and those of corporate clients accounted for 23%, 23% and 40%, respectively, showing the good market liquidity and market structure. With regard to serving the industry, DCE has kept changing market service concept, innovating market expansion mode and guiding iron and steel enterprises to directly take part in futures hedging. Meanwhile, it has expanded the utilization of futures derivatives in multiple aspects and encouraged iron and steel enterprises to adopt the pricing mode of “futures price + basis”, thus boosting the futures market to better serve the real economy. On one hand, DCE has strengthened market training to cultivate futures talents through such training as the “Training Provided by Leading Iron & Steel Enterprises”, the “EDP Training Course of Iron & Steel Enterprises Leaders” and the “Coal, Coking and Ore Industry Conference”; on the other hand, it has given play to the functions of the futures market to provide enterprises with new practice opportunities by organizing the basis trading pilot and the over-the-counter options pilot of coal and coke mines.
Talking about the future work, Wang says that DCE will continue to improve the operation quality and efficiency, strive to provide the global market with open and transparent commodity futures prices of wide representativeness and settled by RMB, and keep enhancing its core competitiveness of serving the economy and its international influence. First, it will strengthen market regulation, keep improving the regulation system, enrich the regulation means, intensify the regulation force, and strictly crack down on market manipulations, thus guaranteeing the smooth and orderly operation of the iron ore futures. Second, it will keep improving the existing rules and systems of futures contracts, continue to improve and optimize the contract design and institutional arrangement of iron ore by closely focusing on the demand of serving the real economy, carry out the bonded delivery business, further reduce the market operation cost and enhance the market operation efficiency, and strive to solve the delivery smoothness, the market participating convenience and other issues. Third, it will enhance the contract stability, follow the changes of the mainstream products in the spot market closely and continuously, and adjust the delivery quality standards at proper time with the mainstream products in the market as the pricing and delivery benchmarks, and it will continue to improve the stability of the iron ore futures contracts through the brand delivery system. Fourth, it will enhance the contract continuity and optimize the contract as well as the trading and delivery systems by improving the iron ore warehouse receipt service provider system and the futures trading companies system, thus providing clients with a way to buy and sell standard iron ore warehouse receipts and guaranteeing the liquidity of non-dominant contracts and the continuity of futures contracts. Fifth, it will improve the completeness of derivatives instruments, and strengthen the over-the-counter market construction and support industry enterprises to take part in the over-the-counter options pilot and the basis trading pilot while actively striving for the launching of iron ore floor options.
Wang stresses that the Chinese futures market has entered into a new era with diversified derivatives instruments and an open and direct environment. DCE will realize the steady growth from 1 to N in aspects of commodity futures and options as well as opening and facilitate the construction of a world’s first-class derivatives exchange on the basis of the preliminary strategy transformation and in accordance with the guideline of “consolidating, enriching and improving”. Meanwhile, it will always adhere to the idea of co-construction, sharing and win-win, continue to intensify the cooperation with relevant parties, and well serve the risk management of iron and steel enterprises. He hopes that domestic and foreign industry enterprises will, under the increasingly complicated market, effectively participate in the futures market, well develop and apply the iron ore futures, and manage the risks brought about by the fluctuation of iron ore prices to their production and operation, thus facilitating the steady development of the industry under the effective risk management.
