China International Oils and Oilseeds Conference
The China International Oils and Oilseeds Conference was held this past weekend at the Shangri-la in Guangzhou, China with what appeared to be great success. AsiaEtrading.com had the pleasure of attending to investigate the agriculture industry in China. As can be expected at a conference like this the entire oilseeds industry vertical was in attendance. There were plantation owners, cash traders, brokers, processing facilitators and the finished goods vendors. As the electronic trading resource for Asia I wanted to meet that segment of the industry concerned with electronic trading.
The principal sponsors of the event were the Dalian Commodity Exchange (DCE) and Bursa Malaysia. As you may know the DCE trades Soybeans, Soybean Meal and Soybean Oil and Bursa Malaysia (BMB) trades the Crude Palm Oil (CPO) contract. The DCE is China’s largest exchange by volume and ranked 12th internationally. Malaysia was the worlds largest exporter of CPO but has recently been usurped by Indonesia, however, the benchmark CPO price is found on the BMB.
Also in attendance was the CME and NYSE Euronext whose footprint I have yet to come across in Asia. NYSE Euronext was well represented by Cecelia Zhong, Head of China Market Development and Peter Blogg Head of Product Management. I hope to corner them in the near future and discover their Asia strategy (stay tuned). Stephen Lai of NextView was also in attendance delighting us with his insights of the data vendor industry. I discovered that there are approximately 150 million equity accounts in China (mostly retail) but only about 1 million futures accounts. There appears to be a lot of upside in China’s futures brokerage industry.
Speaking of which there were several mainland-based futures brokers who I had a chance to meet with. In no particular order: GF Futures, Galaxy Futures, Great Wall Futures, China International Futures (CIFCO), Zhujiang International Futures, Shenyin & Wanguo Futures, Success Futures, Xin Hu Futures, Shanghai Orient Securities Futures, Guang Yong Futures, Okachi Investments, Nanhua Futures, TianQi Futures, Yongan Futures, Orient Pacific Futures (they were from Malaysia) and the Julong Group. The Julong Group is actually a vertically integrated Oilseeds company but have an active futures trading desk. I am sure there were more brokers at the conference.
While there was indeed a language barrier in some instances I was able to get a sense of the structure of the industry from a trade processing standpoint. Not surprising Sunguard was mentioned as an ISV mostly in the back office space. There was also a company called SharpPoint which I have come across in my travels here in Asia but I doubt they are known outside Hong Kong or China. This company provides the front end (SP Trader) and uses Patsystems as its back-end. The founders were employees of the Stock Exchange of Hong Kong and appear to have a growing business of their own in the mainlands electronic trading industry. There were also a few local vendors that were mentioned and will require some more investigation from my side.
FIX didn’t seem to be so prevalent though not absent. The brokers who did know of FIX realize that their western tier 1 customers wanted it.
While I only spent 1 day at the conference I learned a great many things. Hopefully, next year they will invite me back again.