In order to support regions and industries seriously affected by the epidemic to accelerate the recovery and development, the CSRC recently issued 23 policies and measures, one of which is that futures exchanges reduce the handling fees of relevant futures operating institutions and seat fees. Give full play to the role of the futures market, give full play to the hedging function of futures, and help enterprises in regions and industries seriously affected by the epidemic to manage risks.
“Affected by geopolitical conflicts, repeated epidemics and other factors, commodity prices remain high and volatile, bringing greater cost pressure to many Chinese enterprises. In this case, enterprises often have a stronger demand for risk management and hope to hedge through the commodity futures trading market.” Liu Xiangdong, deputy director of the Economic Research Department of the China Center for international economic exchanges, told the Securities Daily that in the face of commodity price fluctuations, the rational use of hedging is conducive to ensuring the stable production and operation of enterprises.
enterprises actively explore and combine
According to the statistics of the reporter of Securities Daily, as of May 22, 812 hedging related announcements have been issued by Listed Companies in Shanghai and Shenzhen this year, so as to prevent and reduce the operating risks brought to the company by the price fluctuation of raw materials by actively participating in futures hedging.
Liu Xiangdong introduced that this year, many listed companies have taken measures to take the initiative to avoid risks, on the one hand, because the price fluctuation of raw materials has intensified, on the other hand, because the listed companies have deepened their understanding of hedging, significantly strengthened their awareness and measures of risk management, and actively avoided the risk of price fluctuation through hedging.
Nanhua Futures Co.Ltd(603093) derivatives Service Department Project Manager Wu Zhiping told the reporter of Securities Daily: “previously, listed companies did not pay attention to hedging and lacked relevant management systems for hedging business. Under this background, exchanges and futures companies actively entered the market.” “Listed companies continue to promote the ‘enterprise style plan’. This policy proposes that the exchange take the initiative to reduce the handling fees of enterprises in relevant epidemic affected areas, which is conducive to promoting enterprises to actively use futures instruments.”
According to the data of “enterprise style plan” released by Dalian Commodity Exchange (hereinafter referred to as “Dachang exchange”), 165 entity enterprises were guided to participate in the exploration of the combination of time and cash in 2021, covering 15 futures and 8 option varieties of Dachang exchange, and the number and coverage of projects increased significantly. Many enterprises test the water of financial derivatives through the “enterprise risk plan” to realize risk management and improve the operation of enterprises in a way of combination of expectation and cash.
Liu Xiangdong told reporters that the futures exchange is accelerating the promotion of future cash linkage, providing enterprises with more trading opportunities inside and outside the market, enabling them to timely hedge the risks caused by commodity price fluctuations through futures, options and other derivatives transactions, lock the purchase price in advance through hedging, deal with the impact of changes in the international situation on the commodity market, and avoid heavy losses caused by sharp fluctuations in commodity prices.
futures market functions are more perfect
With the continuous development of China’s futures market, the current hedging is no longer a simple buying and selling operation. Basis trading has been widely used in many fields such as non-ferrous metals, ferrous metals, Shenzhen Agricultural Products Group Co.Ltd(000061) and so on.
Lawyer Weng Guanxing, a partner of Shanghai Yingtai law firm, told the Securities Daily that if business operators ignore the risk control system and stop loss line in the hedging process and continue to increase their positions in one direction, they are likely to be watched by international speculators and burst their positions. Hedging provides more risk management tools for enterprises’ spot operation, but it also puts forward higher requirements for market participants.
“Enterprises must correctly understand hedging, operate according to the established transaction plan, and do not turn risk control measures into risk measures, so as to affect the interests of public investors.” Weng Guanxing said.
The CSRC also said that it would steadily expand the “futures price stabilization order” to energy and chemical futures varieties such as asphalt and low sulfur fuel oil.
Zhou Xibing, a researcher at the soft power research center of Chinese local enterprises, told the Securities Daily that through the “futures price stabilization order”, the upstream enterprises of the industry can lock in the minimum sales price, realize the sales price “rise in case of rise and do not fall in case of fall”, and the downstream enterprises of the industry can realize the hedging effect of “rise in case of rise and fall in case of fall”. This new model opens a new idea of risk management in the field of futures derivatives service industry.
“China’s futures market with more perfect functions can not only serve more enterprises, but also ensure the controllability and autonomy of China’s industrial chain, reduce the costs of manufacturing, logistics and R & D, and enhance the global competitiveness of Chinese enterprises.” Zhou Xibing said.
