Take Hong Kong as the "bridgehead" to carry out key regional layout and global network construction

Implementing the new development concept, constructing a new development pattern, and deeply promoting internationalization have become major tasks for China's futures and derivatives industry in the new development stage. With the deepening of the internationalization of the industry, the importance of the internationalization of futures companies has become increasingly prominent. How to go abroad to compete with international financial institutions, effectively serve Chinese companies that "go global" and provide customers with value-added services is both an opportunity and a challenge for futures companies.

"With the gradual opening of China’s financial market, China’s futures market urgently needs to develop from a closed regional market to an open international market to better serve the country’s reform and opening up, the “Belt and Road” initiative, and the dual-cycle strategy. International trade in bulk commodities serves the internationalization of the renminbi and economic globalization. Accelerate the opening of China’s futures market. While gradually exploring and promoting futures exchanges, futures market regulatory rules, and the internationalization of futures investors, it is necessary to accelerate the promotion of futures companies Internationalization." Speaking of the internationalization of the futures industry, Nanhua Futures Chairman Luo Xufeng told a reporter from the Futures Daily.

"The wind starts at the end of Qingping." The second supplement to the "Mainland and Hong Kong Closer Economic Partnership Arrangement" signed in 2005 stipulates that "the Mainland allows eligible Mainland futures companies to conduct futures business in Hong Kong, including the establishment of branches." This allows futures companies that have just stepped out of the futures market to clean up and rectify the hope of innovation and development, and strengthen their confidence in the standardized development of the futures market. However, for futures companies that are in the stage of "recovery", it is not an easy decision. . Whether setting up branches in Hong Kong can achieve the expected operating results is unknown, but not taking risks also means giving up opportunities. After careful consideration, Luo Xufeng, then general manager of Nanhua Futures, believes that in the context of China's opening to the outside world and the expected expansion of international trade, it is a blue ocean for futures companies to participate in global financial services. In the end, with the Zheshang spirit of "dare to be the first in the world" and the courage to "loss up to 5 million yuan" (the minimum registered capital requirement), Luo Xufeng decided to enter the overseas market. In March 2006, Nanhua Futures was the first batch to be approved by the China Securities Regulatory Commission to set up branches in Hong Kong, thus starting the exploration of overseas financial markets.

From the perspective of regional layout, as an international financial center, Hong Kong, China, has a sound legal system, low tax rate, complete infrastructure facilities, and high-quality professional talents, and has won the favor of investors from all over the world. As the first step in the internationalization process, Nanhua Futures first established a subsidiary in Hong Kong-Nanhua Futures (Hong Kong) Co., Ltd. on June 20, 2006. After opening the Hong Kong market, after careful preparations, Nanhua Securities (Hong Kong) Co., Ltd., Nanhua Foreign Exchange (Hong Kong) Co., Ltd., Nanhua Asset Management (Hong Kong) Co., Ltd., Henghua International Financial Co., Ltd., and Henghua International Capital Co., Ltd. were established. Company, Henghua International Technology Business Service Co., Ltd. etc.

The United States is the birthplace of the modern futures market. The futures market is the most developed and mature. For any financial institution that aspires to internationalization, it is a battleground for military experts. Therefore, Nanhua Futures chose the United States as the second step of its internationalization journey. On August 5, 2013, Nanhua Futures established Nanhua American Holdings Co., Ltd. in the United States. According to the relevant person in charge of Nanhua Futures, the U.S. futures market is relatively developed and the futures trading infrastructure is complete. Entering the United States can not only learn advanced futures company business concepts, business management models and technologies, but also have access to a large number of business resources and accumulate local customer resources. , Which is conducive to the company's first internationalization in space and time.

As an important trading port in the world, Singapore has concentrated a large number of commodity trading companies, and has the Singapore Exchange and the Singapore Asia Pacific Exchange. In response to the “Belt and Road” initiative and supporting industrial customers in international trade, Nanhua Futures took the lead in establishing Henghua International Finance (Singapore) Co., Ltd. in Singapore on November 24, 2016, and Henghua International on January 23, 2019. Asset Management (Singapore) Pte Ltd. The branches in Singapore and Hong Kong, China are horns of each other, further consolidating the foundation and advantages of Nanhua Futures in the Asian derivatives market.

As one of the global financial centers, London is also one of the important regions for the layout of various financial institutions. At the same time, the London Metal Exchange (LME) is also a market with a high degree of participation by Chinese companies and investors. The establishment of a branch in London is conducive to further enhancing the breadth and depth of services for domestic and foreign investors, and becoming a stronghold for the entire European market. On July 17, 2018, Nanhua Futures established Nanhua Financial (UK) Limited in London. At this point, the global layout of Nanhua Futures has basically been completed, and a network spanning three continents and covering 24-hour time zone transactions has been completed.

At the same time, in order to straighten out the management structure and improve management efficiency, after reorganization in 2015, the wholly-owned subsidiary in Hong Kong was renamed Henghua International Financial Co., Ltd. (hereinafter referred to as Henghua International), and its subsidiaries were renamed at the same time. After 15 years of development, Henghua International has developed into a diversified financial group company with 17 overseas branches and business licenses, forming securities trading, futures contract trading, foreign exchange trading, investment consulting services, asset management, and clearing services. , Loan business, and trade services are equal to an integrated financial service system. Strong business service capabilities and a solid foundation for future innovation and development have gradually revealed the advantages of Nanhua Futures in the field of international business.

Horizontal expansion of business, full license to build comprehensive financial service capabilities

The completion of the regional layout has built a solid foundation for the internationalization of Nanhua Futures, and the continuously obtained licenses and business qualifications are like steel and bricks, allowing international buildings to rise from the ground. Faced with the needs of foreign investors' services and its vision for greater development, the company continues to expand its fields and applies for a series of licenses and business permits. It is understood that Henghua International has licenses for futures, securities, asset management, and foreign exchange in multiple regions, and its business scope has covered futures brokerage, asset management, securities brokerage, leveraged foreign exchange trading, futures investment consulting business, and commodities. Trade, lending business, financial training, securities investment consulting business, clearing business and other fields.

For investors, licenses in different markets are conducive to promoting inter-market arbitrage, while the use of trading and clearing authorization can help customers improve the efficiency of capital use and significantly reduce risk management costs. Behind Nanhua Futures' pursuit of full license is a sincere heart to serve customers.

In 2020, on the basis of having obtained the business qualifications of the Hong Kong Securities Regulatory Commission for Type 1, 2, 3, 4, 5, and 9 licenses, all companies of Henghua International will actively adjust their business structure and abandon the 3 types of foreign exchange licenses. The business was transferred to its Singapore and British companies to carry out, and at the same time, last year, it gave up the trading membership of the Dubai Gold and Commodities Exchange, which is not actively trading. Currently, the membership qualifications owned by Henghua International are as follows:

With the approval of the Hong Kong Stock Exchange, Henghua International Securities Co., Ltd. has obtained the qualification of a participant of the Hong Kong Stock Exchange and a direct settlement participant of Hong Kong Securities Clearing Company Limited. Henghua International is a direct participant of the Hong Kong Futures Exchange under the Hong Kong Stock Exchange and a participant of the futures clearing house, a trading member of the European Futures Exchange, and a member of the Euronext Paris Derivatives Market. In addition, Henghua International Capital Co., Ltd. has also obtained a money lender license issued by the Hong Kong Licensing Court.

Nanhua America Co., Ltd. obtained the approval of the National Futures Association (NFA) to become a member of the NFA, obtained the qualification of futures commission merchant business, and became a clearing member of the Chicago Mercantile Exchange, the Chicago Board of Trade, the New York Mercantile Exchange and the New York Mercantile Exchange, Dubai Commodity exchange clearing members, all conditions clearing members of American Intercontinental Trading, etc.

Henghua International Capital (Singapore) Co., Ltd. obtained a capital market service license issued by the Monetary Authority of Singapore, was approved to engage in futures contract trading and leveraged foreign exchange trading, and obtained a capital market service license issued by the Monetary Authority of Singapore to engage in futures contract trading and leverage Foreign exchange transactions. And obtain the Singapore Exchange Derivatives Trading and Clearing Membership, and the Singapore Asia Pacific Exchange Clearing Membership.

Nanhua Financial (UK) Co., Ltd. obtained a capital market service license issued by the Financial Conduct Authority of the United Kingdom on May 17, 2019, and was approved to engage in the brokerage, agency, consulting and self-operation of futures, options, stocks, and rolling spot foreign exchange contracts Business, and obtain LME second circle membership in 2020.

On the basis of the completion of the regional layout and the acquisition of business licenses, Henghua International strives to open up the business collaboration of its subsidiaries. At present, Nanhua Futures Hong Kong, American, Singapore and British companies have gradually formed interconnections in business. Hong Kong, China is the core to develop Asia-Pacific business, Singapore is the core to develop Singapore’s Middle East business, and Chicago, the United States is the core to develop the North American market. Business, to develop European business with London as the core. At the same time, Nanhua Futures Headquarters also established an International Department, insisting on the combination of "bringing in" and "going out", forming three time zones in Asia, North America, and Europe, with 24-hour trading, and building a complete domestic and foreign client transaction settlement system.

In the journey of building an international system, opportunities and challenges coexist. Facing the fierce competition with international financial institutions, Henghua International has reformed in many aspects such as equity, governance structure, and service level. First, in the process of internationalization, Nanhua Futures became more familiar with international market laws and regulations, access rules and trading rules; second, Nanhua Futures has cultivated an international operation team that includes professionals in business, compliance, IT, and customer service. This enables Nanhua Futures to be able to meet the international needs of customers; finally, Nanhua Futures has accumulated a lot of valuable experience in connection with major exchanges in the global market, channels, settlements and services to various investors. Direct access to trading channels, reduced credit risk, and enhanced business autonomy, all of these advantages provide convenience for Nanhua Futures to expand its international development space in the future.

3 Serve the national strategy and compose the new glory of internationalization

In Luo Xufeng's view, a key factor in China's rapid economic development is the firm reform and opening up, especially embracing globalization, which enables China to give full play to its comparative advantages while gaining dividends from participating in global competition.

"To actively integrate into the global supply chain, if you want to open the market, you only have to open the door to do business." He said that China is now the world's most important commodity producer and the most important market country. With the expansion of capital and the globalization of the economy, the scope of risk transmission is rapidly globalizing. In the process of Chinese enterprises "going out" and overseas institutions "bringing in", there are always problems of how to carry out risk management and how to make enterprises increase the stability of business models and reduce uncertainty in the process of business development.

It is precisely because risks are everywhere that any market participant's most concern is not how much money can be made, but how to lock in risks and ensure the sustainability of the business. Luo Xufeng believes that China’s futures business institutions shoulder the historical mission of serving the national economy, serving industry customers and institutional investors, and need to "go global" to broaden their horizons, learn the latest tools and products in the global derivatives industry, and enhance their own capabilities and performance. It is a good service to protect domestic enterprises, and it also serves the country’s strategy of "bringing in" to help foreign investors understand the Chinese market and invest in the Chinese market.

"The main business of futures companies is to manage risks. Our main task in operation is to eliminate uncertainty for customers and enhance business stability. Therefore, our own operations must also guard against risks. In the process of'going out', we must It is important to learn the rules, understand the rules, and learn local regulations in advance to reduce the operational risks in the exhibition industry." Luo Xufeng said.

As the world's largest consumer of commodities, as China's futures market continues to open to the outside world, China in the future will surely become the pricing center of global derivatives. China's increasingly mature market environment, numerous market participants and rich product lines will surely attract more and more international investors, including various investment funds and institutional investors, and intermediaries to enter the Chinese market.

"In recent years, the internationalization strategy actively promoted by the China Securities Regulatory Commission has become increasingly effective. A large number of Chinese futures companies have "goed out" and set up their own overseas subsidiaries to serve the country's "Belt and Road" initiative, while also "bringing in". It is playing an increasingly important role in the process.” Luo Xufeng told a reporter from the Futures Daily that more and more overseas investment institutions have entered the domestic capital market through QFII and RQFII, Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect and other channels. The trend is still accelerating.

Driving on the fast track of internationalization, Luo Xufeng believes that an international market needs to be supported in seven aspects: one is a stable and open market environment, including the continuous support of regulatory policies, trading rules and the national macro policy environment; Goods delivery conditions and policies that are conducive to international delivery; third is the establishment of a foreign-friendly financial institution policy; fourth is a convenient channel for capital flow; fifth is an account opening transaction process that conforms to international practices; sixth is a relatively stable domestic and foreign foundation Customer groups; Seventh, all exchanges already have various derivatives that meet the needs of international investors. "In the past two years, under the promotion of the China Securities Regulatory Commission, the internationalization level of China's futures market has been significantly improved, and the service capabilities and service levels of the futures market from hardware to software are being greatly improved," he said.

As the first batch of futures companies to set up branches overseas, Nanhua Futures has initially possessed the ability to provide a full range of services from securities services, asset management to risk management for domestic enterprises to "go global". At the same time, the company's overseas branches also have the ability to serve foreign institutional investors to participate in the domestic capital market through QFII and RQFII channels or Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect channels, or to participate in the domestic futures market as foreign participants in special varieties.

However, the internationalization ambitions of Nanhua people go far beyond this. The goal of Nanhua International and its subsidiaries under Nanhua Futures is to become the best overseas business service provider in China. "Building a new development pattern in which domestic and international double cycles are the mainstay and mutual promotion of domestic and international double cycles" is a strategic choice to reshape my country's new advantages in international cooperation and competition in the face of complex international and domestic situations. Nanhua Futures will continue its efforts on the basis of its current international advantages, especially to seize the historical opportunity of "bringing in", effectively carry out the overseas market development of international products, promote the development of QFII and RQFII business, and strengthen the development in China The cooperation with overseas institutions has become a channel for international investors to enter China’s futures and derivatives market, partners in promoting competition and cooperation, and active efforts on the journey of achieving a high level of opening up to the outside world and increasing the international influence of China’s prices. At the same time, we will continue to improve our professional capabilities in serving national strategies and the national economy, and strive to become a comprehensive financial service provider with derivatives business as its core.