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In his speech at the “Institutional Commodity Derivatives Forum (ICDF) 2018”, Wang Fenghai, CEO of Dalian Commodity Exchange (DCE), said that DCE will respond more rapidly to the requirements of the era for “diversity and opening up”, further integrate financial resources such as futures, banks, insurance, securities and funds, continue to step up the cultivation of major institutional clients and industrial clients, and provide platforms for institutional investors to serve the real economy, so as to jointly promote the quality-oriented economic development.
Wang said that China's futures market is the achievement of reform and opening up, and has achieved a historic leap after growing out of nothing and becoming bigger and stronger in the course of more than 2 decades of development. For a long time, DCE has focused on improving the structure of market participants and the quality of market operation, continuously stepped up cooperation with futures companies, banks, insurance companies, securities companies, funds and other institutions, and constantly pushed the institutional investors to deepen their participation in DCE’s business innovation and market cultivation, so as to make joint efforts in improving the service for the real economy.
According to the sources, over the years, DCE has stepped up the innovation in products and instruments in a bid to provide new channels for the institutional investors to participate in the futures market. Since 2013, listed on DCE have been 7 futures products such as coking coal, iron ore and egg as well as the soybean meal options. At present, DCE has initially formed a diversified system of instruments and products including both futures and options covering the 6 major sectors of grain, oils and oilseeds, timber, animal husbandry, chemicals and energy and minerals.
On May 4 this year, the overseas traders were introduced into the iron ore futures, indicating that a futures product listed and traded in China was internationalized for the first time. The opening up of the futures market provides a new stage for the institutional investors to tap into the international market. By the end of July, a total of 83 overseas clients from Singapore, the United Arab Emirates, the United Kingdom, Japan, Australia, China’s Hong Kong, China’s Taiwan and other countries and regions had opened accounts, and 56 of them had participated in the trading. Meanwhile, in order to advance the internationalization strategy, DCE has continuously stepped up its support for the banks and futures companies in their efforts to “go abroad”, and organized a number of market cultivation activities overseas, effectively facilitating the internationalization of the iron ore futures.
While constantly improving the floor trading market business, DCE has actively explored the development of the OTC market, providing a new way for institutional investors to serve the individualized and diversified risk management demands of the industrial enterprises. In recent years, DCE has launched 36 commodity futures indices and 2 spot index series. At present, 18 fund companies have proposed the cooperation in 26 commodity futures funds, and DCE has authorized 13 fund companies, futures companies, banks and other institutions to develop publicly offered funds, futures asset management plans, bank wealth-management products, commodity index swaps and other investment products based on commodity indices.
In order to better serve the market participants, DCE has stepped up its efforts in industry cultivation so as to create new opportunities for institutional investors to serve the real economy. Under the guidance of the concept of co-construction, sharing and win-win development, from 2014 to 2017, DCE supported the futures companies, insurance companies, banks, securities companies and other financial institutions in completing 47 “insurance + futures” pilot projects, 71 pilot projects of OTC options and 5 pilot projects of basis trade, constantly exploring the effective modes for serving the real economy. This year, DCE has continued to introduce a variety of business models such as “insurance + futures”, OTC options and basis trade, especially the “Farmers’ Income Guarantee Program” characterized by the joint participation of multiple market players such as futures companies, securities companies and banks, in which 83 “insurance + futures” pilot projects for corn and soybean have been put into operation. In addition, through the DCE Research Institute, EDP training, industrial bases and industry-finance bases, industry research, industry conferences and other service brands, DCE has implemented the “Program for Improving Structure of Traders”, so as to step up the cultivation of major institutional clients and industrial clients, push the institutional investors to understand the operating rules of commodity futures and the risk management demands on the spot market, and explore the potential trading opportunities.
With unremitted efforts, initial results have been achieved in the above-mentioned initiatives. By the end of July this year, the open interest held by the corporate clients including the institutional clients accounted for 54% of the total, and more than 60% of the total respectively for the mature products such as soybean meal, soybean oil and RBD palm olein. The corporate clients have become the leading force in the DCE futures market.
Wang pointed out that currently China’s futures market has entered a new era of diversified derivatives instruments and opening up of the market, which will provide more risk management services for industrial enterprises in a wider range of fields, and will also bring significant opportunities to institutional investors in serving the real economy. Going forward, DCE will accelerate its adaptation to the requirements of the new era for “diversity and opening up”, further integrate financial resources such as futures, banks, insurance, securities and funds and continue to step up the cultivation of institutional clients and industrial clients. In addition, DCE will speed up the listing of the futures such as ethylene glycol, hog and japonica rice, as well as corn and iron ore options, steadily advance the internationalization of the futures products of Iron Ore, No. 1 Soybean, No. 2 Soybean and RBD Palm Olein, and continue to push forward the “Farmers’ Income Guarantee Program”, so as to provide platforms for institutional investors to serve the real economy and jointly improve the quality of the economic development.
