China Malaysia Commercial Exchange Joins Hands to Promote Cross border Trade
Recently, the 2024 Palm and Laurel Oil Price Outlook Conference and Exhibition (POC2024) hosted by the Malaysian Derivatives Exchange (BMD) was held in Kuala Lumpur. Ran Hua, Secretary of the Party Committee and Chairman of the Dalian Commodity Exchange, attended the conference and delivered a speech. He stated that in the past year, the futures market of major commercial exchanges has maintained a stable and positive development trend, especially the continuous and healthy development of the oil and fat sector, and the continuous enhancement of industrial service capabilities.
The reporter learned that in the past year, Dashang has adhered to serving the real economy, innovating and keeping up with market demand, launching a series of new varieties, measures, and services, and achieving new results in market development work. One is the continuous enrichment of the derivative product system, with the listing of styrene options and ethylene glycol options, achieving full coverage of futures and option tools in the chemical industry chain. The total number of listed futures and options has reached 34, covering multiple varieties such as grains, oils and fats, energy minerals, chemicals, animal husbandry, and trees. At the same time, actively strengthening the integration and development of the internal and external market systems, and deepening personalized and precise services for the real economy. Secondly, the market opening up to the outside world continues to deepen, with overseas traders actively participating in four soybean futures varieties. The proportion of transactions and holdings of overseas customers continues to increase compared to the early stages of opening up, and the market participation structure is further optimized to better serve the operation of the global agricultural product industry chain. Thirdly, the market functions will be further enhanced. On the one hand, we will continue to strengthen market supervision, enhance our technological regulatory capabilities, effectively crack down on various illegal and irregular behaviors, and ensure the safe and stable operation of the market; On the other hand, efforts are being made to cultivate and guide industrial enterprises to make reasonable use of futures pricing and risk management, serving the improvement of enterprise competitiveness and the stable operation of industrial and supply chains, achieving a high-level balance between regulation and market efficiency.
It is reported that in 2023, the total trading volume of commodity futures and options on the Da Shang Exchange reached 2.5 billion lots, a year-on-year increase of about 10%. The daily average position exceeded 14.7 million lots, and market risk diversification and carrying capacity continued to improve. Among them, as one of the most influential variety sectors of the Big Commodity Exchange, the oil and fat industry sector, including five varieties including Yellow Soybean 1, Yellow Soybean 2, Soybean Meal, Soybean Oil, and Palm Oil, has achieved full coverage of futures and options tools, and opened up the entire industry chain products to the outside world, building a mature market system and providing convenience for global oil and fat enterprises to carry out cross market arbitrage and risk management, Continuously contribute to the smooth operation of cross-border trade and the stable development of the industrial chain.
Taking palm oil as an example, Ran Hua introduced that relying on China as an important global importer and consumer of palm oil products as the foundation of the spot market and the opening up of products to the outside world, the quality of operation and international influence of the palm oil futures market of Da Shang Suo have steadily improved. In terms of market size, the trading volume of palm oil futures in 2023 exceeded 210 million hands, ranking third in the global agricultural futures and options contract trading volume rankings. From the perspective of market structure, palm oil futures unit clients hold 75% of the positions, while option unit clients hold 65% of the positions. Multiple Southeast Asian industrial clients are widely involved. From the perspective of functional performance, the correlation coefficient between palm oil futures prices and spot prices in mainland China, as well as BMD crude palm oil futures prices, exceeds 0.9. Currently, over 70% of palm oil spot trade in mainland China uses the futures prices of major trading houses as pricing benchmarks, and domestic and foreign enterprises use major trading houses and BMD to cross market hedging, continuously enhancing their market service capabilities.
Ran Hua said that Dachang would continue to adhere to the direction of marketization, rule of law and internationalization, continue to deepen the reform and opening up of the market, build the market into an international first-class derivatives exchange combining futures and cash, on-site and off-site coordination, and domestic and overseas connectivity, and better serve global market participants around the three main lines of product innovation, technology driven, and ecosystem construction.
It is understood that since 2006, Da Shang Suo has been closely cooperating with BMD, and using the annual POC Conference and the International Oils and Oils Conference as bridges, continuously deepening multi-level exchanges between the two sides in terms of products, markets, and other aspects. Especially at the 2023 International Oils and Oils Conference and the Agricultural and Livestock Industry (Derivatives) Conference held in Dalian last year, the two sides jointly signed an authorization agreement for the delivery and settlement price of soybean oil futures, further deepening strategic cooperation. Based on this, the Malaysian Exchange Dalian Commodity Exchange Soybean Oil Futures (FSOY) contract developed will be listed for trading on BMD on March 18th.