Whiterock Asset and CITIC Futures organized the 8th Financial Derivatives Risk Management Spring Forum in Shanghai lately. Wang Weijun, Vice President of Dalian Commodity Exchange (DCE), said in the speech that the futures market of 2019 should focus on the financial supply-side reform. To fulfill the task, DCE will strive to consolidate, enrich and improve the development of the Dalian futures market in various aspects like improving financial service and preventing financial risks.
DCE Party Committee has arranged for the major tasks of the exchange in 2019. It has made clear that DCE will adhere to the main line of strengthening the financial supply-side reform and serving the real economy and the general work guideline of making progress while maintaining stability. It will continue to consolidate the results of strategic transformation development, enrich the connotation of the diversified and open development, and accelerate the pace of constructing a world’s first-class derivatives exchange in accordance with the principle of consolidation, enrichment and improvement.
With regard to how to strengthen the financial supply-side reform, Wang Weijun made a detailed explanation according to the specific tasks of the exchange. He believed that first, DCE should increase the total supply of the futures market both in quantity and quality and solve the imbalanced development of the financing field and the risk management field and the imbalance of the derivatives market’s structural system in the financial market by improving the scale, operation efficiency and quality of the market, thus promoting the structural balance and functional maturation among financial markets.
Second, DCE should increase product supply and optimize product system. The derivatives market’s scope of serving the real economy and its basis and capacity of supporting the real economy lie in the supply of products and instruments. In 2019, DCE will accelerate the listing of polished round-grained rice, styrene and gas coal futures, speed up the progress of listing hog, shipping and dry red pepper futures, and develop scrap steel and other products. While cultivating the soybean meal and corn futures options, it will facilitate the listing of iron ore, corn starch, soybean oil, PP and RBD palm olein options and carry out the after-hours trading of energy and chemical products. It will boost the listing of swap spread, basis contract and other structural futures and options. More efficient and better financial service will be provided for the development of the real economy through the product supply.
Third, DCE should increase institutional supply to reduce cost and increase efficiency. In 2019, DCE will adjust the quality standard for soybean meal and fiberboard contracts, optimize the iron ore bonded delivery and expand its bonded delivery areas, promote the implementation of the iron ore brand delivery system, the registered brand system of LLDPE and PP delivery and the factory warehouse system of plastic products, and improve the delivery systems of metallurgical coke and coking coal, thus refining the existing products. Meanwhile, it will further improve fundamental systems, expand the futures market maker business to more products, improve the continuity of dominant contracts and the vitality of near-month contracts of listed products, fully optimize the trader suitability system, adapt to the scaled and institutionalized trend of traders, make further research in the position limit system, and explore the block trade mechanism. The positive institutional transformation will be boosted, with satisfying the market demand as the basis and enhancing the service efficiency as the goal.
Fourth, DCE should strengthen and expand the openness of the market to boost its development. In 2019, DCE will accelerate the building of an iron ore international pricing center by focusing on the margin offset with various currencies, the profit swap scheme, the direct connect for special overseas participants and the international market cultivation; it will realize the opening-up of No. 1 soybean, RBD palm olein, soybean meal and soybean oil products, advance the internationalization of No. 2 soybean, research the internationalization of plastic products, and encourage QFIIs and RQFIIs to take part in the Dalian futures market. In addition, it will explore the cooperation in the mutual listing of contracts with overseas exchanges and develop more cooperation paths with exchanges and institutions in countries and regions along the “Belt and Road”, thus furthering its internationalization strategy.
Fifth, DCE should enhance the financial science and technology to improve the supply of technical services. In 2019, DCE will strengthen the efforts on developing and constructing key systems like the Core Trading System (Stage VII), promote the construction of the Innovation Lab, adapt itself to the fin-tech development, and support and drive the business innovation.
To further improve the capacity of serving the real economy, the whole industry should make use of the market and industry cultivation service, the “accelerator” for the market development, and intensification of front-line regulation and risk prevention and control, the “stabilizer” for the market development. In 2019, DCE will continue to cement the services for agriculture, rural areas and rural residents as well as the industries, and promote the in-depth integration of the futures market and the real economy; it will strengthen training on institutional investors and guide various participants, especially instructional investors, to involve in the market, thus further improving the structure of traders; it will cement the member service and industry talent cultivation to lay a solid foundation for the sound and sustainable development of the futures industry. Besides, it will adhere to the principle of managing and regulating the market by law and realize a higher balance between the market efficiency and the risk prevention and control from the perspective of strengthening the pre-research and pre-judgment for risk prevention and control and reinforcing the bottom line thinking against risks, in a bid to hold the bottom line of no systematic risk.
Wang Weijun said that DCE would consolidate, enrich and improve the development of the Dalian futures market by improving financial service and preventing financial risks. He hoped that all parties would continue to support and involve in the Dalian futures market and form a concerted efforts for building a standardized, transparent and open capital market featured with tenacity and vitality, thus making the futures market better serve the real economy.
