Exchange to launch oil contracts
By Richard Fu |
May 29, 2012, Tuesday
|
Print Edition
Print Edition
THE Shanghai Futures Exchange aims to launch crude oil contracts within the year and will allow foreign participation in trading gradually as China continues to liberalize its commodities futures market.
The contract will help domestic companies hedge against the fluctuations in the global oil markets and improve China's influence over pricing, said Wang Lihua, chairwoman of the local bourse. China is the world's No. 2 petroleum user, relying on imports for more than half of its needs.
"The launch of the crude futures is not only about the Shanghai Futures Exchange having a new contract, but it more symbolizes the opening-up of China's commodities futures market," Wang told the Shanghai Derivatives Market Forum yesterday.
Zhou Daojiong, former chairman of the China Securities Regulatory Commission, said a crude contract is more complicated than existing futures in China in terms of delivery and participants, and it needs the joint efforts from currency, customs and fiscal authorities.
The proposed contract will be based on sour crude oil, which contains the impurity sulfur, and be priced in either the yuan or the US dollar. Delivery will occur at bonded warehouses, Wang said. The exchange is working with the State Administration of Foreign Exchange on setting quotas for crude investors to allow participants convert the currency freely within certain limits.
Wang said the exchange expects the crude contact will make it one of the crude benchmarks in the Asia-Pacific time zone and Shanghai a global crude futures market.
Following crude, the bourse may also let foreign investors trade on nonferrous metals and precious metals contracts, Wang said. China's commodities futures market is now off-limit to foreign investors. She indicated the Shanghai bourse, which competes with the London Metal Exchange in offering products like copper and aluminum, may set up overseas delivery points to boost its position globally.
The Shanghai exchange in late 2010 started a trial to allow copper and aluminum delivery to bonded warehouses in Shanghai's free trade zones. There, the metals are exempted from value-added tax as well as being exempted from import duties.
The LME, the world's largest metals marketplace, also aims to expand its warehouse network into China, the world's largest user of most industrial metals, though current rules prohibit it from doing so.
Wang also said Shanghai's bourse looks to develop more futures for the steel sector, including iron ore, hot-rolled coil and steel plates. It launched the steel wire rod and rebar futures contracts in 2009.
Vice Mayor Tu Guangshao said the city is studying government bond futures, commodity price index futures and options.
The contract will help domestic companies hedge against the fluctuations in the global oil markets and improve China's influence over pricing, said Wang Lihua, chairwoman of the local bourse. China is the world's No. 2 petroleum user, relying on imports for more than half of its needs.
"The launch of the crude futures is not only about the Shanghai Futures Exchange having a new contract, but it more symbolizes the opening-up of China's commodities futures market," Wang told the Shanghai Derivatives Market Forum yesterday.
Zhou Daojiong, former chairman of the China Securities Regulatory Commission, said a crude contract is more complicated than existing futures in China in terms of delivery and participants, and it needs the joint efforts from currency, customs and fiscal authorities.
The proposed contract will be based on sour crude oil, which contains the impurity sulfur, and be priced in either the yuan or the US dollar. Delivery will occur at bonded warehouses, Wang said. The exchange is working with the State Administration of Foreign Exchange on setting quotas for crude investors to allow participants convert the currency freely within certain limits.
Wang said the exchange expects the crude contact will make it one of the crude benchmarks in the Asia-Pacific time zone and Shanghai a global crude futures market.
Following crude, the bourse may also let foreign investors trade on nonferrous metals and precious metals contracts, Wang said. China's commodities futures market is now off-limit to foreign investors. She indicated the Shanghai bourse, which competes with the London Metal Exchange in offering products like copper and aluminum, may set up overseas delivery points to boost its position globally.
The Shanghai exchange in late 2010 started a trial to allow copper and aluminum delivery to bonded warehouses in Shanghai's free trade zones. There, the metals are exempted from value-added tax as well as being exempted from import duties.
The LME, the world's largest metals marketplace, also aims to expand its warehouse network into China, the world's largest user of most industrial metals, though current rules prohibit it from doing so.
Wang also said Shanghai's bourse looks to develop more futures for the steel sector, including iron ore, hot-rolled coil and steel plates. It launched the steel wire rod and rebar futures contracts in 2009.
Vice Mayor Tu Guangshao said the city is studying government bond futures, commodity price index futures and options.
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