On June 17-19, 2024, the 2024 International Derivatives Expo (IDX 2024) hosted by Futures Industry Association (FIA) was successfully held in London, UK. It was the second time that Shanghai Futures Exchange (SHFE) participated in IDX as an exhibitor and shared the latest developments of China’s futures market, attracting wide attention from various participants of the event.

IDX 2024 brought together more than 1,000 attendees from global derivatives exchanges such as SHFE, ZCE, HKEX, CME, ICE, LME, and Eurex, regulators such as CFTC, as well as futures brokers, technology service providers, and over 30 exhibitors from the global futures industry. This year’s themes focus on evolving regulatory landscape in global derivatives markets, opportunities and challenges facing global derivatives exchanges, commodities markets in transition, etc.

In recent years, China’s futures market kept opening up. In August, 2023, China’s first shipping futures product “Containerized Freight Index (Europe Service) Futures” was listed on Shanghai International Energy Exchange (INE, a subsidiary and international platform of SHFE). This is not only China’s first service-oriented futures product, but also China’s first cash-settled index futures product listed on a commodity futures exchange, which is also open to global investors, and is an ideal financial tool to counter potential freight rate volatility risks for shipping companies, logistics companies and importers/exporters. The trading of this product was active since its listing, with active market participation and close correlation between the futures price and the spot price. Some export enterprises and freight forwarders have already begun to trade this product for hedging, which to some extent hedged the risk of freight rate fluctuation and reduced the operating costs of these enterprises. By now, we have 6 specified products (also known as “international products”) directly opened to overseas investors and 16 products accessible to Qualified Foreign Investors (QFIs). Meanwhile, both the number and participation of overseas investors kept growing. In 2023, overseas investors of Shanghai crude oil futures accounted for more than 30% both in average daily trading volume and open interest, which is one of the highest among listed onshore contracts. In addition, since September, 2022, Qualified Foreign Investors (QFI) were allowed to trade China’s onshore commodity futures and options, which further expanded the access channel for global investors. Their trading on SHFE started to grow significantly since the second half of 2023, demonstrating their commitment to and interest in SHFE’s market.

To make full use of this opportunity to introduce China’s futures market to global investors, SHFE participated in the sponsored session named “Opportunities in Trading China” during IDX 2024, and invited JP Morgan Futures Co. Ltd, Minmetals (UK) Limited, Citigroup Global Markets Limited, and JunHe LLP to share views on topics of most interest to overseas investors regarding China’s futures market. This session attracted nearly a hundred participants from different countries and regions covering various sectors. The guest speakers believed that, although China's futures market started late compared to overseas markets, it has found a unique way in market development, opening up, risk management and legal framework. China's futures market has a large scale and good liquidity, and in recent years, the market gradually opened to overseas investors, with a myriad of innovations and breakthroughs in market access, account opening, capital inflow/outflow, foreign exchange conversion, bonded physical delivery, tax policy, etc., making it more convenient for global investors to participate. In addition, in the face of the highly volatile international commodity market in recent years, China's futures market has also coped well, and its effective risk management practices in recent years have stood the test of the market and provided useful reference for overseas markets.

Moving forward, China’s futures market will continue to serve global traders, diversify its product mix, optimize market rules and mechanisms, and provide more effective tools of price discovery and risk management for global traders.