China aims to liberalise its capital markets by allowing foreign investors to transact in the domestic commodity futures environment.
The Shanghai Futures Exchange accounts for over 50% of daily futures trade volume however the SFHE only accepts local investors.
The SFHE September Crude oil contract is trading at RMB 5,080 ($802.53) per ton.
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Once the crude oil contract is launched, the Shanghai Futures Exchange will gradually allow foreign investors to trade on other contracts, with non-ferrous metals products next in line to be freed up, followed by precious metals.
“The launch of crude oil futures is not merely about the Shanghai Futures Exchange having a new contract, but it symbolises the gradual opening up of China’s commodities futures to foreign investors,” Chairman Wang Lihua said at the Shanghai Derivatives Market Forum.
“We hope to attract foreign investors, producers, traders, and consumers, and launch the contract within the year. We hope the contract will in time become one of the crude oil pricing benchmarks in the Asia-Pacific time zone.”
China has seen contraction in its economic growth and as a result global commodity prices have been declining.