On November 4, 2023, China Financial Futures Exchange (CFFEX) and Bank of China Limited (BOC) signed a strategic cooperation agreement.
The signing of the agreement between CFFEX and BOC is a positive step for both parties to further strengthen collaboration and deepen cooperation between...
To further improve the contract design of China government bond (CGB) futures and facilitate market functioning, China Financial Futures Exchange (CFFEX) released the amended 2-Year CGB Futures Contract Specifications and Detailed Trading Rules of CFFEX for 2-Year CGB Futures Contract on October 20, 2023, adjusting the tick size of 2-Year CGB futures contracts.
In response to market participants’ appeal for adjustment to the tick size of 2-Year CGB futures contracts, after careful evaluation and extensive public consultation, CFFEX decided to adjust the tick size of 2-Year CGB futures contracts from RMB 0.005 to RMB 0.002 according to market demands. This will increase precision of quotes on 2-Year CGB futures contracts, better align with the quoting precision in the CGB cash market, help investors improve precision of their hedging and other investment strategies, and promote the coordinated development of CGB cash and futures markets. The amended contracts rules will take effect on all listed 2-Year CGB futures contracts starting from the settlement period on November 6, 2023.
Next, under the leadership of the CSRC, CFFEX will fulfill its duties to pay close attention to market operations after the amendments of the 2-Year CGB futures contracts rules, make practical efforts to protect the legitimate rights and interests of investors, and effectively prevent market risks, so as to ensure healthy, stable and orderly operations of the CGB futures market.
On July 28, 2023, China Financial Futures Exchange (CFFEX) announced the launch of Changfeng Program 2023, a support program to promote the participation of mid- and long-term institutional investors, on August 1, 2023. The Changfeng Program aims to form synergy in promoting the participation of institutional investors, especially mid- and long-term investors including mutual funds, insurers, pension funds, annuities, etc., in the financial futures market in a bid to better serve national strategies and the real economy.
Increasing the participation of mid- and long-term institutional investors to enhance their role as a “market stabilizer” is pivotal to achieving the goal of “improving the functions of the capital market and increasing the proportion of direct financing” as stated by the CPC Central Committee. As an integral part of the modern capital market with Chinese characteristics, the financial futures market bears the mission to support the high-quality development of the capital market, and pushes ahead market innovation and development in accordance with national strategies. Financial futures are important risk management tools featuring precision, low-cost and efficiency. Giving full play to the functioning of financial futures is critical to increasing the participation of mid- and long-term institutional investors, which is conducive to accelerating investment-end reforms and improving the vitality of the capital market.
In recent years, various types of professional institutions have entered the financial futures market, accounting for an increasingly large proportion of trading volume and open interest. At present, institutions have become major participants in and effectively enhanced the stability of the financial futures market. Nevertheless, the investor composition is yet to be improved, particularly given the limited understanding and use of financial futures by mid- and long-term institutional investors compared with their cash market exposure. To address this issue, CFFEX has formulated and implemented the Changfeng Program on the basis of extensive market consultation. Through a series of measures empowering members and institutions, CFFEX aims to establish a coordinated program targeting mid- and long-term institutional investors to continuously broaden their participation, thus contributing to the comprehensive registration-based IPO reform.
The Changfeng Program will empower both members and institutional investors. For members, CFFEX will roll out a series of measures covering training, technology and incentives, to better support members and other intermediaries in servicing the participation of mid- and long-term institutional investors, enhancing the risk management capabilities of institutions, and cultivating an integrated investment philosophy that involves both the cash and futures markets. To be specific, CFFEX will establish a multi-dimensional institutional investor education and training program that is based on existing institutional service initiatives and training programs of CFFEX and gives full play to the synergy of all stakeholders; build a digital channel for institutional services via the “Financial Futures Connect” institutional service platform, supporting members to provide better services to institutional clients; and provide targeted incentives to members to develop and better serve institutional clients.
For institutional investors, CFFEX will select a number of institutions to demonstrate best practices and user cases regarding risk management with financial futures. Such institutions will play an exemplary role to encourage the use of financial futures across their respective sectors.
Under the leadership of the China Securities Regulatory Commission (CSRC), CFFEX will continue to enhance services to all types of institutional investors, especially mid- and long-term investors, to improve market participants’ satisfaction and the quality of institutional participation. CFFEX will continue to pursue the high-quality development of the financial futures market, so as to improve the vitality and resilience of the capital market, and contribute to the development of the modern capital market with Chinese characteristics.
Seminars will be organized for futures-company members regarding the Changfeng Program. You may contact Ms. Feng (021-50160310), Ms. Wang (021-50166333) or email@example.com for more information on the Changfeng Program and relevant measures.
Recently, China Financial Futures Exchange (CFFEX) officially completed the registration of 30-year China government bond (CGB) futures contracts (the “Contracts”) with the China Securities Regulatory Commission (CSRC). Today, CFFEX released the 30-year CGB futures contract specifications and relevant rules, and the Notice on the Listing and Trading of 30-Year China Government Bond Futures Contracts (the “Notice”). The first batch of three contracts will be listed for trading on April 21, 2023.
On March 17, 2023, CFFEX published the draft 30-year CGB futures contract specifications and relevant rules on its website for public consultation. During the consultation period ended March 23, 2023, CFFEX extensively solicited comments and suggestions from market participants and received general approval.
According to the Notice, the Contracts will be listed for trading on April 21, 2023. The first batch of Contracts to be listed include TL2306, TL2309, and TL2312. CFFEX will publish the listing benchmark prices, deliverable CGBs and their conversion factors prior to the listing of the Contracts. The trading margin of the Contracts shall be 3.5% of the contract value. For long and short positions held under the same client number through the same member, either in the same product or across different products of 2-year, 5-year, 10-year and 30-year CGB futures, margin is collected solely from the side for which a larger amount of trading margin is required. The limit up/limit down on the listing day shall be ±7% of each contract’s listing benchmark price. Transaction fee shall be RMB 3 per lot, and is currently exempted for closing out intraday positions. Delivery fee shall be RMB 5 per lot, and a 50% reduction shall apply until December 31, 2023. The maximum size of limit orders in the Contracts shall be 50 lots, and the maximum size of market orders shall be 30 lots.
A CFFEX official commented that preparations for the listing of 30-year CGB futures contracts are completed. Next, under the leadership of the CSRC, CFFEX will steadily proceed with the listing of 30-year CGB futures contracts to ensure a smooth product launch and stable market operations.
With the approval of the China Securities Regulatory Commission (CSRC), China Financial Futures Exchange (CFFEX) adjusts the fees for closing out intraday positions in CSI 300, SSE 50, CSI 500 and CSI 1000 Index futures contracts to 0.023% of the notional value effective March 20, 2023.
The adjustment aims to further reduce transaction costs and facilitate equity index futures market functioning, and is expected to improve market liquidity to better cater to the risk management demands of various types of investors. This will also help attract more medium and long term investment into the capital market, further enhancing market resilience and competitiveness.
Next, in line with the CSRC’s policy of "system building, no intervention, and zero tolerance” and the principle of "Four Awes" and "One Synergy", CFFEX will continue to strengthen market risk monitoring and trading supervision, so as to maintain the safe and stable operations and promote the high-quality development of the financial futures market.