Analaysts said China has established a risk prevention and dissolution mechanism that not only conforms to international market operation legislation, but is also in line with the reality in the country.
This mechanism has effectively averted the significant risks following the drastic price fluctuations in the international futures markets in recent years, successfully handled the spread and proliferation of extreme market moves experienced last year as a result of the international financial crisis, and maintained the smooth operation of both China’s futures markets and the futures sector.
The Shanghai Futures Exchange or SFE, formed through the merger of the Shanghai Metal Exchange, Shanghai Foodstuffs Commodity Exchange and the Shanghai Commodity Exchange in December 1999, is the largest commodity futures exchange in China in terms of trading volume and transaction value.
The SFE currently trades futures contracts in copper, aluminium, zinc, lead, gold, deformed steel bar, wire rod, natural rubber and fuel oil.
The Zhengzhou Commodity Exchange or ZCE, which was established in 1990 and is now the country’s second-largest commodity exchange, specializes in agricultural and chemical product futures, including hard white wheat, strong gluten wheat, sugar, cotton, rapeseed oil and PTA, a petroleum-based chemical product.
The Zhengzhou Commodity Exchange last year experienced the highest growth in trading volume and transaction value among the three Chinese commodity futures exchanges. ZCE saw its trading volume jump 118.36% year on year to 991.65 million lots and its transaction value swell 223.37% year on year to RMB 61.79 trillion.
The Dalian Commodity Exchange or DCE trades futures contracts on soybean, soybean oil, corn, palm oil, soymeal, coke and LLDPE, a petroleum-based product. Last year, the DCE was the worst-performing commodity exchanges among the three ones in China.
The bourse recorded a 3.27% decline in trading volume, which stood at 806.34 million lots in 2010, and its transaction value grew only 10.79% year on year, reaching RMB 41.71 trillion in the year.
The China Financial Futures Exchange or CFFEX, the country’s first financial futures exchange, started trading the long-awaited stock index futures in April 2010, booked a trading volume of 91.75 million lots
