China’s Zhengzhou Commodity Exchange (ZCE) signed a memorandum of understanding (MOU) with Russia’s Moscow Exchange, which is one of the world’s leading comprehensive exchanges and a backbone of the capital market in Europe and the world.
Experts noted that in line with China’s financial sector opening-up policy, the MOU could enhance bilateral communication and expand cooperation fields under the framework of the China-proposed Belt & Road Initiative (BRI).
As major countries in the BRI, “China and Russia possess relatively high levels of complementarity in different industries, including energy sources, agriculture and others,” Li Qiang, Director of the Research Centre under Xinhu Futures, told.
“A risky situation persists due to current geopolitical problems, and the MOU could benefit both countries and hedge economic risks to some extent,” Li said.
China’s commodity markets and industries are becoming more and more internationalised in recent years, which, in turn, require a correspondingly sound and internationalised capital market, including the futures market, Li noted.
Promoting and deepening cross-border transactions is a way to cope with the growing risk management needs of enterprises, since an increasing number of Chinese companies are starting to expand overseas and China is promoting a comprehensive opening-up to attract more foreign investment, the report said, citing industry insiders.
Li noted that a sound and advanced system is a critical element for commodity exchanges, which require years of efforts to become a world-class one.
The ZCE has been striving to provide more items for overseas trading, and the number of foreign investors has reached 115 so far, with the average daily trading volume of foreign traders accounting for about 8 percent of the total, Wang Yamei, Deputy General Manager of the ZCE, told the 2019 China International Futures Forum, which is being held in Zhengzhou, capital of Central China’s Henan Province.
The ZCE has also been improving its settlement services for cross-border transactions, Wang said, citing the examples of purified terephthalic acid futures of the exchange, for which there are 27 deliverable brands, and eight of them are foreign ones.
As of the end of June, the ZCE had 164 members, 269 delivery warehouses and factories, and 14 designated depository banks, according to its website of ZCE.
The total turnover of the exchange was 525 million lots, with a trading volume of 19.42 trillion yuan ($2.7 trillion) and an average daily holding volume of 4.05 million lots.
ZCE on Sunday also signed an MOU with the Multi Commodity Exchange of India.
China has been stepping up efforts to foster an open market for the world, including the financial markets. The Nation also began the trading of yuan denominated natural rubber futures the technically specified rubber (TSR) 20 futures earlier August, becoming the country’s fourth commodities futures to open to both domestic and overseas investors.