The Containerized Freight Index (Europe Service) futures contract, which started trading on the Shanghai International Energy Exchange on Friday, is part of the innovative attempts by the Chinese capital market to help shipping companies manage their risks better and boost China's influence in pricing in international transportation services, officials and industry insiders said on Friday.

Denominated and settled in the renminbi, the newly introduced futures contract is open to investors all over the world. It is China's first shipping futures product as well as the first futures contract based on services.

Upon contract expiration, open positions of the futures will be closed by calculating the profits and losses at the final settlement price and settling them in cash.

The Shanghai (Export) Containerized Freight Index based on settled rates, or the SCFIS, which is updated by the Shanghai Shipping Exchange every Monday, is the underlying asset of the newly launched futures contract. The SCFIS tracks the average level of spot-market, post-departure settled rates for containerships traveling from Shanghai to Europe.

In all, 369,000 lots of the main contract were traded on Friday, with their value reaching 16.56 billion yuan ($2.27 billion). After opening at 770 points, the main contract closed at 916.3 points.

Fang Xinghai, vice-chairman of the China Securities Regulatory Commission, the country's top securities watchdog, said at the launch ceremony on Friday that the Containerized Freight Index (Europe Service) futures is one of the most innovative products introduced in the Chinese futures market in the past few years. The new product's stable launch and operation will help advance the Chinese futures market's opening-up and promote further product innovation.

The new futures contract will enrich Chinese shipping companies' risk management tools. This is significant because demand for such tools has grown over the past few years amid higher freight rates volatility, said Tian Xiangyang, chairman of the Shanghai Futures Exchange, the parent of the Shanghai International Energy Exchange.

The Shanghai Futures Exchange's dedication to advancing opening-up is borne out by the number of products open to international investors and the rising interest in them among overseas investors, said Wang.

Source: CHINA DAILY: https://mp.weixin.qq.com/s/yWCwrrO8wLLJYhnIJ5jNLA