China to ramp up derivative market development, sec regulator says

SHANGHAI, Dec 19 (Reuters) – China will accelerate the rollout of futures and options for natural gas, refined oil and peanuts to help price discovery, a senior securities regulator said on Saturday.

Fang Xinghai, vice chairman of the China Securities Regulatory Commission, also told a forum in Shenzhen that the country’s planned expansion of its capital markets would require a more sophisticated financial derivative market.

“Currently, China’s financial futures and options market is at an early stage of development,” Fang said in a speech that was published by the China Futures Association.

“It far lags market participants’ growing needs to manage their risks. It also fails to keep pace with China’s economic development and financial reforms.”

However, Fang said growth in China’s commodities futures market is “encouraging”.

Total futures trading turnover jumped 46% during the first 11 months of 2020 to 382.5 trillion yuan ($58.53 trillion), fueled by rising risk-hedging needs due to the coronavirus.

China this year has rolled out 12 new commodity derivative products. Institutional holdings in China’s commodities market jumped by 38%, Fang added.

He said China must ensure smooth launch of hog futures on January 8, and will also study carbon futures to help Beijing meet its pledge to become carbon neutral by 2060.

Separately, the Shanghai Petroleum and Natural Gas Exchange said over the weekend that it has launched an innovative business model that allows group purchases for liquefied natural gas (LNG) tenders.

$1 = 6.5348 Chinese yuan renminbi Reporting by Samuel Shen and David Stanway Editing by Shri Navaratnam