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On December 26, Dalian Commodity Exchange (DCE) announced that the two banks of Shanghai Pudong Development Bank (SPD Bank) and Industrial Bank have been added to the list of the designated futures margin depository banks. Among the conditions for the two banks to become DCE’s designated futures margin depository banks, what interests the market is that the two banks should make feasible service programs for futures innovation in promoting the functioning of the futures market and innovating the businesses and the cooperation in accordance with the features of the listed products and the members and clients. In this regard, a DCE official said in a recent interview that it is an important initiative of DCE in strengthening the capacity of the futures market for serving the real economy and energetically promoting the cooperation of the banking and futures sectors by taking the opportunity of liberalizing the qualification for the depository business of the futures margin. Currently, initial results and new progress have been achieved in DCE’s efforts in the cooperation of the banking and futures sectors.
The official pointed out that in the practice of the futures market serving the real economy, DCE realizes that in comparison with the widespread cooperation between the banking and securities sectors, the banking and funds sectors and the banking and trust sectors, it is clear that the cooperation between the banking and futures sectors is yet to be expanded and deepened. Except the margin depository business and a small number of warehouse receipts pledge businesses of the five major state-owned holding banks, the banking sector has little involvement in the futures market. For the futures market, inadequate involvement of the industrial clients is still an area to be improved in terms of the futures market serving the real economy. As a result of insufficient understanding of the futures market, the lack of professionals, the restrictions in systems and mechanisms and other factors, many enterprises do not have enough internal impetus to use the derivatives instruments to avoid the risks of the price fluctuations of raw materials and products. However, as the banks boast the advantages of abundant industrial clients and developed service networks, the cooperation with them will launch more direct and effective new channels for the popularization of the hedging knowledge and technologies, promotion of the futures financial products and the management of the delivery warehouses, etc. Moreover, the banks may direct and urge the enterprises to rationally participate in the hedging and manage the risks of price fluctuations on the basis of their production and operation characteristics by such means as reducing the loan rates and increasing the line of credit, thus setting up an external guiding and urging mechanism to improve the industrial clients’ internal impetus. The move will help the futures market develop industrial clients, improve the investors structure as well as benefit the banks in controlling the risks and improving the safety of the loan funds, thus achieving the complementary advantages and win-win results of the banks and the futures market.
It is based on the above understanding that DCE has been active in promoting the cooperation between the banking and futures sectors as one of the key tasks this year. In April 2013, DCE held the “Forum on Banking-Futures Cooperative Businesses”, where the attending representatives of the banks gave active response to strengthening the banking-futures cooperation and achieving the win-win results, and jointly discussed the directions for the banking-futures cooperation in the future, proposing the cooperation in the six aspects of margins depositing, developing industrial clients, promoting the supporting services of assets management and the innovation in financial products, making the warehouse receipts pledge business more effective and stronger, providing multi-level markets with services of settlement and risks control, and collaborating in supervision over delivery warehouses so as to prevent and control delivery risks; in August, DCE promulgated and put into effect the “Measures for Management of Designated Depository Banks”, confirming the requirements for the access conditions, businesses, technologies and supervision, and setting providing the futures market with innovative services as an important part in the qualification examination in a bid to encourage the banks to improve their services in diversified competition.
In specific efforts, both sides of DCE and the banks, on the basis of strictly observing the confidential system of client information, have cooperated in various aspects such as jointly developing industrial clients, optimizing the warehouse receipts pledge and financing services, promoting the program of query of factory warehouse letters of gurantee and reducing the delivery risks. By now, DCE has designated 7 futures margin depository banks, signed the agreements with 12 banks on the standard warehouse receipts pledge business and been active in inking strategic cooperation agreements with relevant banks so as to define the cooperation directions of both sides in services, products, channels, resources, information, research and other aspects in accordance with both sides’ strategies of future development and advantages.
A DCE official said that next DCE will work with relevant banks, focus on the central work of serving the real economy, continue to strengthen the development of the systems and mechanisms for banking-futures cooperation, deepen the current cooperation, audaciously explore and innovate the contents and ways of banking-futures cooperation and strive to push up the banking-futures cooperation to a new level.
