China to open up Commodity Trading to foreigners

China aims to liberalise its capital markets by allowing foreign investors to transact in the domestic commodity futures environment.

The Shanghai Futures Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term 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.

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.