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April 20, 2017

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White sugar options start trading in Zhengzhou

CHINA’S second commodity options, white sugar options, started trading on Zhengzhou Commodity Exchange yesterday.

“Businesses can now use a combination of investment tools including spot contracts, futures contracts and options to manage risks more effectively,” said Ma Wensheng, chairman of Xinhu Futures, a Shanghai-based futures brokerage.

Unlike futures contract, options give investors the right but not the obligation to buy or sell the underlying assets at a predetermined price, effectively giving investors some insurance against future price volatility.

The white sugar options are China’s second commodity options after soybean meal, currently trading on Dalian Commodity Exchange.

Fang Xinghai, vice chairman of the China Securities Regulatory Commission, said the financial instrument will facilitate the health of the sugar industry, benefiting 40 million sugar cane farmers in remote and poor regions.

As demand for commodity derivatives rises, more futures and options products will be launched, Fang said.


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