The Shanghai Futures Exchange is one of the most important and largest in the world, and is a key part of the Chinese economy. Located in Shanghai, the exchange is home to a vast range of futures products, and the largest Chinese futures market.
Futures trading on the Shanghai Futures Exchange began in 1999, after the Chinese authorities decided to liberalize the formerly state-controlled economy. The exchange was initially formed to help protect domestic producers from international price fluctuations, as well as to provide a hedge for domestic investors in the event of a currency devaluation. At the same time, the exchange was intended to facilitate internal market reforms and boost the country’s economy.
Futures contracts on the Shanghai Futures Exchange (SFE) represent the delivery of specific quantities of commodities at a specified future date, at the set prices agreed upon in an earlier transaction between two parties. The range of products traded on the exchange includes many agricultural products, base metals, energy, financial and chemical products, among others.
The exchange is well regulated with a registration system in place. There are various types of membership including open-market members, qualified market makers, designated service providers and contract members. An SFE membership serves as a kind of passport to the Chinese market, allowing its holders to apply for net contracts and derivatives trading. All clearing and settlement services at the exchange are provided by China Clearing Corporation, the only actively operating clearinghouse in mainland China.
The exchange provides a stable trading environment to participants and their intermediaries, large or small, by enabling a fair and transparent environment in which to trade. It also operates an efficient and reliable market structure, offering complete information access and security, along with a complete suite of market surveillance capabilities.
The exchange seeks to continuously develop new products and services for its customers and to broaden its offering of futures, options and other products. The exchange works closely with all regulatory bodies, particularly the National Development and Reform Commission and the State Economic and Trade Commission, to improve the quality of their products and services.
The Shanghai Futures Exchange is one of the most important exchange markets in China and the world, and a major contributor to the Chinese economy. As China continues to grow and become increasingly interconnected with the global economy, the exchange is positioned to continue to play a major role in the Chinese economy.
