SHANGHAI Dec 27 The Shanghai Futures Exchange
(SHFE) will open up to foreign institutions and develop options
and other derivative contracts under a plan to become a leading
Asia-Pacific bourse over the next five years.
China's only metals futures exchange will broaden its
contract offerings beyond commodities and will continue actively
developing crude oil futures, financial derivatives, index
futures and metals futures options over the next five years,
Chairman Yang Maijun said in a new five year development plan
for 2013 to 2017.
"The exchange will move towards opening up to overseas
players over the next five years and aims to become an important
pricing centre for global commodity markets," Yang said in a
statement issued late on Wednesday.
Chinese authorities keep a tight grip on the country's
commodities exchanges to deter speculators from driving up food
and resource prices.
While the SHFE has a booming domestic copper futures market
which offers Chinese participants significant liquidity in
trading the base metal, foreign access is limited. Foreign firms
are only allowed to trade via brokers and only after setting up
a locally registered non-financial unit, which is required to
put up a large amount of registered capital.
The lack of integration between Chinese and overseas
exchanges limits the influence of the world's top commodities
buying country in international commodities prices, which
therefore often fail to accurately reflect underlying Chinese
The exchange has said its planned crude oil futures contract
would be China's first to be open to foreign players but the
proposal is still awaiting approval from regulators.
Yang also said the exchange would need to transform itself
into a corporate entity to improve risk management, making the
exchange's members - mainly futures brokerages - into
shareholders, Yang said. He did not say if the exchange plans to
list on the stock market.
The SHFE said it has also launched a nonferrous metals index
under a trial to provide a price reference for the industry and
to expand investment opportunities in the metals sector.
The index, called the SHFE-IMCI, is compiled from futures
prices of copper, aluminium, zinc and lead, which are aggregated
on a weighted basis.
(Reporting by Fayen Wong; Editing by Edmund Klamann)