In order to adequately foster institutional investors, deepen the market service of Dalian Commodity Exchange (DCE) for the public funds and other financial institutions and promote the effective connection between the financial institutions and the industries, on December 18, DCE joined hands with Asset Management Association of China (AMAC) to hold the “Seminar on Institution Innovation in Bulk Commodities” in Dalian. The seminar was mainly held for the public funds and other financial institutions, who discussed the participation patterns and market positioning of the institutional investors on the commodity futures market, studied the directions of the financial sector boosting the real economy in the process of institutionalization of the investors of the commodity futures market and compared notes on the functions and market guidance of the exchanges against the backdrop of the era of great assets management.
This year, the investors in the commodity futures market have accelerated the pace of "institutionalization" and the institutional investors represented by the public funds have paid more attention to participation in the commodity market. However, currently the public funds are still weak in the research and development of products on the whole, and far from clear in grasping the market trend of the commodities, and need a long period of incubation to form the capacity for professionally investing in commodity futures compared with the professional and mature commodity investment institutions on the market. In addition, although some special account products of public funds have accumulated outstanding investment results and market recognition, the entire industry still needs to further research and explore how to take advantage of the assets management to participate in the commodity futures and abandon the model of participation in commodity market dominated by the “channel business”; the asset management business of the futures companies is also in the face of the actual demands for the positioning of the business and the market segments at the initial stage at present. Meanwhile, with the gradually deepening market institutionalization, it has been an important task for the exchanges in exercising the market functions to actively guide the relevant investment institutions in rationally participating in the bulk commodity market and providing the industrial institutions with professional services of assets management.
In this regard, a DCE official said that over the years, DCE has unwaveringly adhered to the purpose of serving the industries, effectively carried out various market services and constantly improved the functioning of the futures market. This year, DCE has maintained the momentum of rapid development, and as of November, the trading volume had reached 1.3 billion contracts, accounting for 37 % of the total nationwide.
He said that along with a new round of innovation and development of the futures industry, the market has paid more and more attention to the value of the commodity futures, an important major category of assets, in the assets allocation of the institutions, and the commodity futures market is ushering in an era of “institutionalization” featuring integration and openness, which will cluster more asset management-oriented institutions. To this end, the seminar focused on the service for the public funds and other financial institutions, adequately integrated the actual demands of the institutions in the course of investing in the commodities and designing and developing products with DCE’s innovation and development, and through sharing business experience of representative financial institutions, helped the public funds and other institutional investors make clear of the essentials in participating in the bulk commodity market, in a bid to promote the interaction and exchanges of all kinds of asset management institutions and further make the financial products and business innovations effectively adapt to the industrial entities and expand the service for industries. DCE will also take the opportunity to make efforts to explore the new models for serving the industries, the institutions and the market, provide a platform for the institutional investors to understand the value of investment in bulk commodities, and improve the futures market’s overall capacity for service.
According to the sources, the seminar centered on the three main topics of the value of investment in commodities and investment practices, the new business models of investment in futures and the exchanges’ guidelines for innovation and development in adaptation to institutional investors, and explored the development essentials and innovation guidelines for the commodities and derivatives markets serving the institutional investors and the industries in the forms of both keynote speeches and interactive discussions.
In his keynote address, an official of the member service department of DCE briefed the seminar on the value of investment in bulk commodities and DCE’s guidelines for the work of serving the institutions. He believed that by providing an industry with price references and a platform for hedging, the listing of the contracts of a new futures product will have a far-reaching impact on the business models of the industry, make the enterprises transform the business model of passive exposure to the risks of the fluctuations of the market prices to the modern business model of actively using the financial instruments to manage risks and keep the business risks under control, achieve the transformation of the business models and upgrading of the business in the entire industry, and further catch up with the advanced international level. Meanwhile, the role of the bulk commodities in assets allocation will draw more and more attention of the market and investors in China. While strengthening the industrial basis, DCE will actively consider the market demands of various asset management institutions, guide the institutions in using new products and new businesses to boost the industrial upgrading, and improve the comprehensive capacity of DCE’s products and businesses for serving the market.
Wu Xing, Chairman of Shenzhen Kaifeng Investment Management Co., Ltd., reviewed the strategies of investment in commodity futures in 2013 and predicted the market focuses in 2014. He believed that the management of bulk commodity assets should be oriented toward boosting China’s industrial upgrading and the assets management not only includes the wealth management but also provides services for the enterprises in futures and spot goods as well as the business. The market organizers and regulators should lower the threshold for access, do a good job in service and regulation, and provide a favorable environment for the management of futures assets, including enriching products and instruments, promoting more industrial enterprises’ participation in the market and expanding the business of asset management. The futures companies and investment companies should strengthen the industrial basis, link up with the industries, build in-depth cooperation with the enterprises, and help the enterprises design the mechanisms for using the derivatives instruments for risk control, effectively functioning in the transformation of the enterprises.
Ge Dongmei, Managing Director and chief of the bulk commodity business line of CITIC Securities, described the guidelines for and international experience in the securities companies deploying the bulk commodity businesses. She said that in the context of the overseas markets currently under the regulatory pressure with strong signs of “de-commercialization”, in contrast the domestic policies are more conducive to the securities companies’ development of innovative businesses of commodity futures. As the main player of international trade of bulk commodities, the central enterprises feature large sizes and the trend of growth; it is necessary for the enterprises to build their capacity for conducting the cross-border trade; instead of a single business, the hedging usually integrates with financing or accounting, taxation, foreign exchange control and other financial services, requiring the securities companies’ comprehensive capacity for service; in the future, in the field of bulk commodities, adequately drawing on the overseas investment banks’ experience in the business of bulk commodity, Chinese securities companies will play an increasingly important role.
Xiao Guoping, assistant general manager and manager of general asset management division of Yongan Futures, shared the futures company’s experience in developing the asset management business. In his view, the asset management business of the futures companies has broad space for cooperation with funds and securities companies, including serving as the investment adviser for the fund companies and the special account asset management programs of the securities companies, jointly issuing the special account asset management programs for investment in securities and futures, serving as the manager of the futures assets allocation among the products of the funds and securities companies, and operating in investment by using the option instruments, etc.
In the interactive roundtable discussion session held later, the representatives from Harvest Fund, Fortune SG Fund and Caitong Fund and the representatives from CITIC Securities Futures compared notes on the market issues concerned by the exchanges and the institutional investors, including the CTA practices with Chinese characteristics and the market outlook for asset management institutions participating in the commodity futures market, the market positioning of public placement products for commodities, and the commodity exchanges meeting the demands of the financial institutions and improving capacity for serving the market in the process of institutionalization, etc.
The participants generally agreed that the seminar organized by DCE was in timely response to the demands for the development of the market, deepened the institutional investors’ understanding of the bulk commodities and provided a platform for learning about the value of investment in bulk commodities, drawing on each other’s strengths and conducting full exchanges. The rapid development of the Chinese market requires the institutions to provide more characterized risk management services for the industrial clients as well as more investment products in commodities for all kinds of investors. It is hoped that DCE could step up the innovation in new products, new businesses and new systems and expand the market capacity, and the institutions could share their experience and correctly position themselves, so as to jointly meet the opportunities and challenges in the general market trend of innovation and development.
