To implement the "new national nine opinions" and the spirit of the “Opinions on Further Promoting the Innovative Development of Securities Operational Institutions” (the “Opinions” for short) and urge the securities companies to make full use of the commodity derivatives to serve the business entities, on July 24 and 25, Dalian Commodity Exchange (DCE) joined hands with the Securities Association of China (SAC) to hold the seminar on “Securities Companies Innovating Service for Real Economy” in Dalian, discussing under the new situation how the securities companies find new areas, apply new instruments and develop new products in meeting the demands of the business entities for risk management as well as center around the commodity futures market to carry out the OTC trading business for commodities.
At the seminar, a SAC official said that with the innovation, development and integration of the capital market, the securities companies should not only pay attention to the securities market but concern themselves with the derivatives market and the OTC market from the perspectives of business adaptation and innovative development. The seminar provided the securities companies with directions for understanding the future platforms for product designing and business innovation, addressing the innovative development of the market and serving the real economy.
A DCE official said that currently the reform and development of the capital market is ushering in the period of comprehensive integration, innovation and development, and it has been urgent as well as a practical choice for the securities companies to seek new areas of cooperation, apply new investment instruments and develop new investment products. After more than 20 years of development with the market scale continuously expanded and the mobility constantly increased, the domestic futures market has had the conditions for the participation of the financial institutions. Currently, DCE has listed 15 commodity futures products covering a number of sectors such as agriculture, chemical products and energy and mineral resources, with the international correlation constantly enhanced. In the first half of 2014, the trading volume reached 360 million contracts (unilateral, the same below), with the average daily open interest climbing to 3.95 million contracts. The futures functions of price discovery and risk management have been brought into play, and the market structure is increasingly reasonable, with the positions of the corporate clients accounting for 38.4% of the total in the first half of the year. Earlier, DCE had organized training activities designed for institutional investors so as to reasonably guide the funds, securities companies, banks and other institutional participants in understanding the commodity market and energetically promoted the banking-futures cooperation as well as provided necessary support for industrial clients and financial institutions to effectively participate in the futures market.
The official also said that in the next step, DCE will continue to actively support the institutional investors in entering the futures market, and improve the capacity of financial institutions for serving the market, so as to further optimize the structure of the futures market participants and better serve the real economy and wealth management.
During the two-day seminar, the representatives from well-known domestic securities firms listened to the keynote speeches such as the “development and functioning of domestic commodity futures market”, the “structural adjustment and transformation and the new demands in risk management of the real economy” and the “designing and trading practice of commodity OTC products”, comparing notes on the knowledge of the commodity market as well as the ideas and demands in conducting the businesses.
It was believed that as China is currently in a period of great changes for industrial restructuring, transformation and upgrading, huge demand for risk management has emerged in the industries, and the problems such as the lack of futures trading personnel in the industrial circle and the urgent demand for characterized risk management have made the market earnestly call on the professional financial intermediaries to provide the off-market risk transfer channels. Currently, the standardized floor futures products can solve the problem of risk management for the enterprises to some extent, but the highly characterized OTC commodity derivatives are also important instruments for the enterprises to hedge against the price risks. By encouraging and directing the securities companies and other professional institutions to design the traded products for the clients that can meet the enterprises’ demand for risk management, convenience will be provided for the enterprises to effectively manage the risks of spot goods; as one of the main channels for the institutions to hedge against the net risk exposure of their products and transfer their own risks, the floor futures market will play the core “hedging” role for the institutions.
The attendees generally agreed on the opportunities for the securities companies brought by the current healthy development of the derivatives market, saying that the securities companies carrying out the OTC businesses and developing the modern commodity investment banking will serve the real economy innovatively and meet the securities companies’ demands for business innovation and seeking new profit growth points. Held at the critical juncture of the development of the futures market and the innovation of brokerage business, the meeting is bound to greatly promote contacts and exchanges between the securities industry and the futures institutions, push forward the cooperation of the commodity futures market and the securities industry in innovation and development, and help the securities companies innovate businesses and serve the real economy.
