First, on behalf of CFFEX, I would like to extend my sincere welcome to the leaders and friends of all circles that join today’s Forum on Fostering an Internationalized Derivatives Market and a Robust Equity Index Futures & Options Market.
The year 2018 marks the 40th anniversary of China’s Reform and Opening-up. As pointed out in the report of the 19th National Congress of the CPC, ‘‘socialism with Chinese characteristics has moved to a new era.’’, the nation is ‘‘on its way to building a modern economic system’’, and ‘‘promoting a market fully-open to the world’’. This is in line with the fundamental demand of China’s current economic and financial growth, and requires the financial futures market to make further progress. The new era expects new momentum and new actions. At present the financial futures market is actively exploring international development. It is developing diverse equity index risk management tools, with an aim to better serve the opening-up of the financial sector and improve China’s global competitiveness.
CFFEX is developing its global network and has joined many industry associations including World Federation of Exchanges, International Organization of Securities Commissions, Future Industry Association and International Swaps and Derivatives Association. It has entered into MoU agreements with 12 major overseas exchanges, and built partnerships throughout Asia, Europe and America.
CFFEX has carried out two important overseas partnership programs over the past several years. One was jointly establishing China-Europe International Exchange (CEINEX) with Shanghai Stock Exchange and Deutsche Borse in Frankfurt, Germany in 2015. At present CEIE has launched over 70 ETF, ETN and bond products, and will focus on cultivating the D share market to provide more diversified financial services to Chinese companies that are going global, and support the co- development of real economies in China and Europe. Another was acquiring 40% of the stake of Pakistan Stock Exchange (PSX) in consortium with Shanghai Stock Exchanges, Shenzhen Stock Exchanges and other partners in early 2017, which was the first acquisition of an overseas exchange by domestic exchanges. Now the consortium is committed to helping PSX improve corporate governance, form development plans and support its growth. It will work with PSX to meet the financing needs of companies under the ‘‘China-Pakistan Economic Corridor Program’’, and play a positive role in the Belt and Road Initiative.
CFFEX, while exploring global business, continues to improve market transaction rules, optimize investor structure and promote the role of equity index futures market. In recent years, the trading volume to open interest ratio of stock index futures market has remained stable and investor structure has continued to improve, with certified financial institutions including securities companies, PE funds, QFIIs and RQFIIs being the major players, contributing to nearly 70% of the average daily open interest of the whole market. In 2017 CFFEX, under the guidance of CSRC, made two adjustments to the trading arrangements of stock index futures. Since the beginning of this year (as of May 18, 2018), China’s stock index futures market performance has been stable and orderly, and the total trading volume of CSI300, SSE50 and CSI500 futures reached 4.656 million contracts, a YoY increase of 40.38%. The total notional value was 5.09 trillion Yuan, a YoY increase of 48.88%. Past capital market experience indicates that equity index futures are the most basic, mature and actively traded type of financial derivatives and an indispensable risk management tool in any robust capital market. In coming years CFFEX will follow the guidance of CSRC, strive to meet market demands, improve product management and risk control and promote derivatives to play a more positive role.
In addition, CFFEX is also developing CSI300, SSE50 and CSI500 index options products. Preparation for the launch of the products is underway now. Global experience indicates that equity index options play a role different from that of equity index futures. The launch of stock index option will be instrumental in introducing the mix of insurance, social security and pension funds to the stock market, which may improve the market eco-system, optimize investor structure, and stabilize the spot market; it will help financial institutions to design principal guaranteed products based on stock index options to meet various risk management needs of investors and improve market services; it will help lay a foundation for volatility index compilation and improve the foresight and effectiveness of macro-prudential policies; it will facilitate the improvement of capital market risk management and sound development of multi-layered capital market.
Dear guests and friends, today’s forum will hold discussions on the internationalization of derivatives markets and the future development of equity index futures and options. I look forward to exchanging ideas with you and hope that you can all contributions suggestions and insight for the further development of China’s financial futures market.
I wish the forum a great success. Thank you!