China Financial Futures Exchange

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China Financial Futures Exchange
Cffex.gif
Founded 2006
Headquarters Shanghai, PRC
Key People Eugene Zhu, CEO; Hu Zheng and Li Zhengqiang, Deputy CEOs
Products Financial derivatives exchange
Website www.cffex.com.cn/en_new

The Shanghai-based China Financial Futures Exchange (CFFEX), launched in 2010, is an electronic platform for financial derivatives.

The exchange launched the country's first stock index futures linked to the CSI 300 Index, an index of 300 Shanghai- and Shenzhen-listed yuan-denominated A shares, in 2010. It also lists futures on the SSE 50 Index, CSI 500 Index as well as 5-year and 10-year Chinese bond futures contract.[1][2]

CFFEX is owned by three commodity derivatives exchanges and two stock exchanges from China. It has 84 members, which consist of 14 general clearing members, 45 trading and clearing members, and 25 trading members, were approved as of April 2, 2008. Moreover, an additional three trading and clearing members and two trading members were approved on July 23, 2008, according to CFFEX's official Chinese language website.

The China Financial Futures Exchange ranked 37th among global derivatives exchanges according to the Futures Industry Association's volume rankings for 2016, with volumes of 18.3 million contracts, down 94.4 percent from 321.5 million contracts in 2015.[3]

Background

The CFFEX was inaugurated on Sept. 8, 2006 in Shanghai with a registered capital of 500 million yuan. China's two stock exchanges, Shanghai Stock Exchange and Shenzhen Stock Exchange, as well as three futures exchanges, Shanghai Futures Exchange, Dalian Commodity Exchange (DCE), and Zhengzhou Commodity Exchange each hold a 20-percent stake.[4]

According to rules set by the China Securities Regulatory Commission, investors were required to have 500,000 yuan ($73,250) in order to open a new account, and had to pass an examination on futures trading.[5] In June 2011, the CSRC published rules for investment in stock index futures by qualified foreign institutional investors. Such investors were bound by threshold, account and trading code obligations.[6]

After an 18-year hiatus, China resumed government bond futures trading in September of 2013 with three five-year contracts. The exchange had begun mock trading of 5-year government bond futures on Feb. 13, 2012 and sought public comments on the futures in July 2013 in preparation for the relaunch.[7] [8] The exchange temporarily set the margin requirements of the contracts to three percent in order to tightly control risk at the start of the listing of the futures.[9] China first began treasury futures trading in 1992 but trading was suspended three years later following an investigation into alleged market manipulation.[10]

Eugene Zhu, the former head of the DCE and chairman of the China Futures Association, was appointed to head the CFFEX by the China Securities Regulatory Commission.

Joint Venture With Deutsche Boerse

A separate joint venture, aimed at offering its products internationally, was created in 2017, with the Shanghai Stock Exchange and Deutsche Boerse each taking a 40 percent stake and CFFEX holding the remaining 20 percent. That venture, established in Germany, is aimed at further opening up China's markets with Renminbi-based products. [11]

Contract Volume

Year Total Annual Volume Percent Change
2016 18,335,855
2015 321,590,923 47.8%
2014 217,581,145 12.4%
2013 193,549,311 84.2%
2012 105,061,825 ~108.4%
2011 ~50,400,000 (est.) ~9.9%
2010 45,873,295 --

Contracts to be Listed

External Links

References

  1. China Financial Futures Exchange Seeks Public Comments on Government Bond Futures Contracts. The Wall Street Journal.
  2. China Financial Futures Exchange Products. CFFEX.
  3. FIA Annual Volume Survey. FIA.
  4. China financial futures exchange set up in Shanghai. PRC Embassy, USA.
  5. China sets index futures trading rules to limit risk. Reuters.
  6. ANALYSIS: China’s New Investment Channel For Qualified Foreign Institutional Investors. Bloomberg BNA.
  7. Mock Trading of Bond Futures to Begin Monday. The Economic Observer.
  8. China Financial Futures Exchange Seeks Public Comments on Government Bond Futures Contracts. The Wall Street Journal.
  9. China details first contracts for restart of govt bond futures trade. Reuters.
  10. China to Start Bond Futures Trading Next Week After 18-Year Halt. Bloomberg.
  11. Shanghai Stock Exchange, China Financial Futures Exchange and Deutsche Boerse agree on Joint Venture. Press Release.