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The 2nd Industrial Enterprises Risk Management Conference is held in Shenyang on October 29. It is jointly organized by Liaoning Provincial Financial Supervision Administration, Liaoning Provincial Securities Regulatory Bureau, Dalian Securities Regulatory Bureau and Dalian Commodity Exchange (DCE). DCE Party Chief and Chairman Li Zhengqiang says that located in Liaoning, DCE hopes to support its development through different ways and make full use of the derivatives market to serve the revitalization of Northeast China.
Li says that Liaoning has spacious arable area, complete industrial categories and solid industrial base, and its industrial entities have strong risk management demand. DCE has always supported the economic development of Liaoning, and the exploration of many modes has originated from Liaoning. For example, it completed the first domestic “insurance + futures” corn price insurance in Yixian County (Jinzhou City) in 2015; the accumulated support amount of its “insurance + futures” pilot in Liaoning reached RMB 45.76 million in 2015-2018; the over-the-counter options pilot was participated by cooperatives in Zhaoyang, Heishan and Beizheng, as well as leading enterprises like Ansteel, Benxi Beiying Steel, Jiusan (Dalian) and Yihai Kerry; and it cooperated with 7 universities in Liaoning to carry out the Futures Training Program and several market promotion activities. “Located in Liaoning, DCE intends to support its development through different ways and make full use of the derivatives market to serve the revitalization of Northeast China.” he says.
At present, the functioning of the derivatives market in Liaoning has been restricted. First, there are limited head offices and branches of futures companies, and only a few number of institutions that can directly offer derivatives market management services. Second, the participation level of Liaoning’s corporate clients in the DCE market has decreased, and enterprises are less likely to make use of the futures. Third, the “insurance + futures” pilot presented slow growth in Liaoning.
With regard to how to support Liaoning enterprises to take part in and make use of the derivatives market, Li shares his suggestions to industrial enterprises, local government and financial institutions. He says that industrial enterprises should clear their doubts and misunderstanding, intensify their risk management awareness, take part in risk management actively and steadily, adapt to the industrial upgrading and the trading mode change, and prevent over speculation and abuse. Relevant government departments should create a good business environment, attract futures companies and other financial institutions to carry out business in Liaoning, boost the promotion and popularization of the “Farmers Revenue Protection Plan”, and set up the fault-tolerant mechanism to encourage enterprises in Liaoning to take part in risk management. With regard to financial institutions, banks are suggested to use their credit superiority to encourage and guide enterprises to make use of the futures and options markets to manage price risks.
