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        China Daily Website

        First crude oil futures market to open in FTZ

        Updated: 2013-12-11 07:06
        By Wei Tian in Shanghai ( China Daily)

        In a major step to build a more internationalized trading platform in the area, a senior FTZ official announced on Tuesday that China's first foray into trading crude oil futures will take place next spring in the China (Shanghai) Pilot Free Trade Zone.

        "The first crude oil futures market will be launched at the Shanghai International Energy Trade Center in the FTZ in March or April next year," Dai Haibo, deputy director of the FTZ administration committee, said in a briefing to the city's legislators.

        With a registered capital of 5 billion yuan ($820 million), the center is by far the largest financial company set up in the FTZ. It is jointly financed by the Shanghai Futures Exchange and Shanghai Futures Information Technology Co Ltd and was launched in Nov 22.

        Dealing with listed transactions, settlements and delivery services for energy products such as crude oil, gas and petrochemicals the center aims to set up a platform for both spot and futures transactions.

        Lu Feng, a senior director at the Shanghai Futures Exchange, said in Shenzhen last week that the launch of a crude oil futures market in FTZ will pave the way for the internationalization of the country's futures market.

        Crude oil futures are still absent from most Asian markets despite multiple attempts to set them up, Lu said.

        "Asia lacks a benchmark market to reflect the supply-demand relations in Asian countries, and this is a good opportunity for China," Lu was quoted by the Securities Times as saying.

        Lu added that crude oil trading faces many restrictions in the Chinese market, but it's a popular market in other countries such as the United States. Crude oil is a very liquid and widely traded product worldwide, and thus it is a good choice for testing the waters, he said.

        Dai said that Shanghai's capital market, which has a 600-trillion-yuan trading volume, is now largely geared toward domestic investors, but it will become more internationalized after the launch of the FTZ.

        Also at the briefing, Dai said that the country's first cross-border e-commerce platform would be launched in the FTZ at the end of December and that it will have more than 500 products available for customers, he said.

        Since it was established at the end of September, Shanghai's FTZ has played a major role as a platform for Chinese companies wishing to invest overseas. So far, six companies registered in the zone have made overseas investments worth $310 million, Dai said.

        Dai also said that 19 of the 23 policies launched to open up the services sector in the FTZ, which will include healthcare, education, telecommunication and game console companies, will be ready within a month and that "companies are queuing up to enter these sectors."

        Another four policies, for transport management, shipping management and legal service companies as well as limited-license banks, are still awaiting approval from central authorities, Dai added.

         
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