Shanghai Futures Exchange

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Shanghai Futures Exchange
Founded 1998
Headquarters Shanghai, PRC
Key People Yang Maijun, CEO; Wang Lihua, chairman
Products Futures in copper, aluminum, natural rubber, fuel oil, zinc and gold
Web site http://www.shfe.com.cn/Ehome/index.jsp

The Shanghai Futures Exchange (SHFE) ranked third among China’s three active derivatives platforms by contract volume in 2007, but it was by far the largest in terms of notional value, listing contracts in copper, aluminum, natural rubber, fuel oil, zinc and gold.

The rubber contract accounted for 44 percent of total exchange turnover in 2006 and 38% in 2007, but the electronic exchange unveiled a new product innovation strategy focused on expansion in metals, energy and chemicals and received approval in 2007 to launch futures in gold, rapeseed oil and low-density polyethylene. It is also seeking to launch a steel contract[1].

Contents

History

The SHFE was formed in 1998 as part of the restructuring of China’s futures industry, which was revived in 1990 after a 60-year hiatus, but saw the government close many of the 40-plus exchanges which emerged because of widespread price manipulation.

The Shanghai Futures Exchange was formed from the merger of the Shanghai Metal Exchange, Shanghai Cereals and Oil Exchange and Shanghai Commodity Exchange. It is one of three surviving entities alongside the the Zhengzhou Commodity Exchange and the Dalian Commodity Exchange, though a Shanghai-based financial derivatives exchange is being developed.

Product Development

Trading started in May 1999, with futures in copper, aluminum, and rubber, and the SHFE is now the premier metals exchange in Asia, competing with the London Metal Exchange, and offering benchmarks including aluminium and copper. However, its natural rubber contract has been the most heavily-traded in China in notional value terms since 2006, followed by its copper futures, whose volume tripled from 2006 to 2007.

A fuel oil future was added on August 24, 2004, and the SHFE has been one of the most active campaigners for regulators to approve new commodity and financial products. While it has long sought to launch steel futures – despite industry resistance – it launched a zinc future on March 22, 2007, and received approval to start a SHFE gold futures contract - launched on January 9, 2008[2], with silver futures expected to follow. Nickel, lead, crude oil, liquefied natural gas and coal have also been identified by exchange officials as areas of potential expansion[3].

Structure and Regulation

All contracts are settled by physical delivery. Trading hours are from 9.00am-11.30am and 1.30pm to 3.00pm. The SHFE is a self-regulated, non-profit organization, overseen by the China Securities Regulatory Commission, with 219 members, including 183 brokerage firms. It also hosts more than 250 distant terminals

Contracts Listed

Events

The SHFE organizes the Shanghai Derivatives Market Forum annually and its fifth session was held in Shanghai on May 28 and 29, 2008 with a focus on "Globalization and Functions of Derivatives Market[4].

References

  1. ↑ Press Release. SHFE. Retrieved on December 6, 2007.
  2. ↑ Press Release. SHFE. Retrieved on January 11, 2008.
  3. ↑ Shanghai exchange plans silver futures. Thomson Financial. Retrieved on December 6, 2007.
  4. ↑ The Fifth Shanghai Derivatives Market Forum. Shanghai Future Exchange. Retrieved on June 1, 2008.
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