Published On: Sat, Mar 20th, 2010

Promote Overseas Pilot Ventures by Domestic Futures Companies Says DCE Liu

National People’s Congress Deputy and President of the Dalian Commodity Exchange Liu Xingqiang offered a suggestion to the NPC regarding stronger support and promotion for allowing domestic futures businesses to open pilot overseas futures brokerage services.

In recent years, foreign and domestic commodity markets have been growing increasingly interconnected, and there is an urgent need for domestic enterprises to be able to utilize both domestic and international commodity futures markets to hedge against market risks. At the same time, there is a growing need for domestic futures companies to provide safe, convenient and professional intermediary services.

The State Council published it’s “Futures Trading Regulations” in 2007, which provided a clear directive for domestic futures companies to engage in the overseas brokerage business. However, the national government has not yet allowed futures companies to engage in this business, with the exception of 31 State-owned import and export enterprises that have received special permission from the State Council. Currently, the large majority of domestic enterprises are prohibited from hedging in overseas futures markets, which puts them in a disadvantageous position in the competitive international economy.

In this regard, the CSRC should consider the feasibility and operation model for promoting domestic futures businesses starting pilot overseas futures brokerage services, so that the numerous State-owned enterprises looking abroad may be provided with complete and specialized intermediary services. At the same time, SAFE, the Ministry of Commerce, SASAC and the other relevant departments should seize upon the current favorable opportunity, In their respective areas of responsibility, and offer support to domestic futures businesses looking to provide overseas futures brokerage services.

They should focus on solving the many problems often encountered In such pilot programs, such as foreign exchange issues, product approval and prohibitive qualifications.

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