Energy trading platform launched
Print Edition
The Shanghai Futures Exchange yesterday officially unveiled its designated energy trading platform that will be first used for its proposed crude oil futures trading, bringing the launch of the long-awaited futures a step closer.
But exchange officials and securities regulators have not given a timetable yet.
The Shanghai International Energy Exchange is based in the city’s new pilot free trade zone, a major testing ground for China’s economic reforms. The government has promised gradual opening-up of its futures markets to foreign investors who are now barred from China’s futures markets.
Shanghai Vice Mayor Tu Guangshao said the new exchange and the proposed crude futures would be a step forward in China’s opening-up of its financial markets, including yuan convertibility.
A presentation given by Shanghai Futures Exchange Chairman Yang Maijun on Thursday at an industry conference showed the crude futures contract may be priced in yuan and use the medium sour crude that China imports.
Previously, the market speculated it will be priced in both the yuan and the US dollar.
The local bourse aims to use the crude contract to create a benchmark for Asia as China’s crude imports keep rising.
However, not everyone is upbeat as concerns have been raised about problems such as liquidity.
“I doubt there will be lots of demand for hedging because production and imports are both dominated by a few state oil companies,” said a senior official at the Shanghai Petroleum Exchange, a spot trading platform for liquefied petroleum gas and natural gas. “Speculators may become the main players.”
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