WFE Interviews with the China Financial Futures Exchange

Author Name: 
Zhang Shenfeng, CFFEX Chairman

FOCUS : Could you give us a bit of background about your exchange?

CFFEX : CFFEX is a young exchange,formally established in Shanghai on September 8, 2006. It is the sole financial futures exchange and sole corporate exchange in Mainland China.

On April 16, 2010, CFFEX launched its first product, the CSI 300 stock index futures. Since then, operations have run stably, experiencing steady growth in volumes and playing an increasingly important role in risk management in China’s capital markets.

As of December 31, 2012, the trading volume of CSI 300 stock index futures accumulated to 201 million contracts with notional value 160.68 trillion Yuan (USD 25.83 trillion). We are proud to witness CSI 300 Index Futures rank among the top five Index Futures across the world in 2012.

FOCUS : How active are foreign investors in your exchange ? How accessible is your market ?

CFFEX : Attracting foreign investors is an important part of our globalization strategy. With full support from the CSRC, all of the relevant policies and rules for QFII (Qualified Foreign Intuitional Investors) participation have been promulgated. On January 25th, 2013, the first QFIIs began to participate in our markets.

More than two years since the launch of our first product, the CSI 300 Index Futures, investors have grown stably to over 130,000 accounts. Among them, institutional investors including securities companies, fund companies, trust companies and QFIIs have all started to enter the market, and the policy guidelines for participation by insurance companies have also been released, thus allowing gradual display of market functions such as risk management, price discovery and innovation. Currently, 61 securities companies, 32 fund companies, 5 trust companies and 4 QFIIs are trading the CSI 300 Index Futures, mainly engaging in hedging and arbitrage. They are playing an integral part in promoting the stability and development of China’s capital market

FOCUS : What new project/product are you currently working on?

CFFEX : Currently, CFFEX is drafting its mid-to-long term strategy, and plans to list different products covering all asset classes, so as to provide a comprehensive product line. New products will fall into three main categories: equity, fixed income and foreign exchange. Equity products will include index options and other types of index futures; fixed income products will include government bond futures as well as interest rate futures and option; foreign exchange products will include forex futures and options as well as other RMB related products. At present, we are at the final stages in preparation for the launch of government bond futures, it will be coming very soon.

In addition, to support the launch of new products and our business development, we are building a stronger, safer and more efficient New Generation IT System. After completion, it will meet our demand for quite a long time into the future.

FOCUS : What are the challenges you see in your market today and in the future?

CFFEX : The market has strong demands for risk management tools such as futures and options. One of our missions is to provide the market with more such instruments. However we have only been established for a relatively short period of time and are scarce in our variety of products. Therefore, the pressing task before CFFEX is to introduce more products and provide a wider spectrum of hedging instruments for the Chinese market.

At the same time, the global derivatives market is undergoing rapid development, and the fact that overseas markets are listing financial futures products based on the China concept or the RMB concept is a great challenge for CFFEX. An ongoing task for CFFEX is to learn from global experience and lessons, enhance international cooperation, make challenges opportunities and improve our overall competitiveness.

FOCUS : How do you assess your exchange`s position at a time of increased globalization?

CFFEX : The pace of China financial markets’ opening up process and the trend of the internationalization of the RMB determine that China should be one of the global centers of risk management for RMB assets. Aiming to provide safe and efficient financial derivatives products and services for global investors, CFFEX has set its specific goals as building a world class exchange with strong social responsibility, comprehensive market functions, advanced corporate governance, robust security and efficiency.

Looking ahead, as CFFEX focuses on its own business development, it also needs to promote international communication and cooperation. In this capacity, the support from WFE and its members are crucial. We hope to carry out extensive exchange and cooperation with WFE and its members, so as to integrate faster into the global market.