Zhengzhou Commodity Exchange launched white sugar options on April 19. Fang Xinghai, deputy head of the China Securities Regulatory Commission (CSRC), said at the launching ceremony that the launching of white sugar options is a major event concerning the innovation and development of the futures market and an important step to implement the central government’s No. 1 document. The CSRC will approve the launch of more futures and options products in due course based on market demands.
Fang said that the Chinese government pays high attention to the development of the futures market, especially to the roles that futures and options have played in serving the real economy, the development of agriculture, rural areas and farmers, the national development strategy. White sugar production is of vital importance to the livelihood of the over 40 million farmers in old revolutionary base areas, areas inhabited by minority nationalities, remote and border areas and poverty-stricken areas. A sustainable and health development of the white sugar industry plays a vital role in lifting farmers out of poverty and promoting the economic development and maintaining the social ability in old revolutionary base areas, areas inhabited by minority nationalities, remote and border areas and poverty-stricken areas. Therefore, in order to better serve the real economy, the development of agriculture, rural areas and farmers, the national development strategy, it is needful to construct and maintain the futures and options market.
Fang pointed out that market participants should adhere to the general work guideline of making progress while maintaining stability. Efforts should be made in three aspects. First, strengthen market supervision and risk control. Zhengzhou Commodity Exchange, China Futures Market Monitoring Center and China Futures Association should strictly implement regulatory requirements, undertake their own regulatory responsibilities and strengthen information sharing and regulatory interaction.
Second, strengthen market promotion and training and education. The commodity exchange should promote publicity of futures products, enrich trainings on options and help enterprises learn, understand and grasp futures so that they can make better use of options tool to manage risks. Futures operators should educate investors so that they could be fully aware of risks in options trading and reasonably participate in options trading. The commodity exchange and agencies should check the implementation of the investor eligibility system in futures operating institutions.
Third, actively and steadily promote the construction of the futures and options market in China. The CSRC will approve the launch of more futures and options products in due course based on market demands and expand its coverage that serves the real economy to better meet the real economy’s need for pricing and risk management.
Chen Huaping, president of Zhengzhou Commodity Exchange, said at the launching ceremony that the offering of white sugar options is conducive to improve the risk management system in the industry and meet the individualized and diversified risk management demands from entity enterprises; it is also conducive to form a more reasonable futures price and improve the market-oriented pricing mechanism; it is also conducive to improve the market structure and service ability of Zhengzhou Commodity Exchange. Based the industry’s demands and market operations, Zhengzhou Commodity Exchange will continuously optimize regulations on white sugar futures and options, do solid work in market cultivation and promotion, explore pilot works in “insurance with options”, guide sugar cane farmers and white sugar enterprises to manage price risks in futures and options and promote the white sugar futures and options market to bring its market functions into full play. Meanwhile, Zhengzhou Commodity Exchange will launch more new products, tools and businesses based on the real economy’s needs.
Translated by Coral