Moderator Mr. Eugene Zheng: Dr. CHEN Han, China Europe International Exchange (CEINEX) is an example of the internationalization of our futures market. What are strategic aims and plans of CEINEX?
[Mission and Vision of CEINEX]
Dr. CHEN: Thank you. Two years ago, following the pace of China's opening up, the Shanghai Stock Exchange and China Financial Futures Exchange crossed over to Frankfurt to jointly establish a new capital platform - CEINEX with Deutsche Börse Group. As a strategic platform for financial cooperation between China and Germany, the mission of CEINEX is supporting to connect “Made in China 2025” with German “Industry 4.0”, supporting to supply the financial services to infrastructure construction along “One Belt, One Road” regions, supporting the real economic cooperation between China and Europe and supporting the globalization of RMB. Our vision and aims are to build a center of trading, pricing, risk management and asset allocation for China and RMB -related financial products in Europe.
[Serve the market opening up strategies]
After nearly 40 years rapid development, China has created an economic miracle in human’s history. With the economic development, our financial market has also made great strides. At present, the size of China’s stock market ranks second in the world and the size of the Chinese bond market ranks third in the world . Our commodity futures and financial derivative markets have also gained increasing influence worldwide. In terms of stocks, the introduction of the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect have effectively promoted the opening up of China's capital markets. In 2016, MSCI decided to include China's A-shares into its emerging market indices. International investors have begun to practically increase their holding of China’s A-share assets. Under this background, , the current demand for A-share related risk management is increasing strongly. However, at present, the accessibility for international investors to the Chinese domestic stock index derivative market is still restricted. Nowadays, only QFII is allowed to access into the market according to the policy. Temporarily International investors who through market connect mechanism invest in A share market, are not yet allowed to participate in the domestic stock index derivatives market and use the stock index derivatives. . ETF options of the Shanghai Stock Exchange which are developing gradually, also belong to domestic derivative instruments for managing A shares’ risk . However, due to their limited openness, international investors cannot use them. In the bond market, agency banks and bond-connect mechanism opened in this year are two parallel ways of opening up of Chinese bond market. They both bring opportunities for the development and opening up of exchange-traded derivatives and OTC derivatives. Regarding commodities, China's commodity futures’ size has become more and more large and their influence has become more and more strong. Unlike stocks, bonds and currencies, which have a localized nature, commodities are inherently global and international. China has been developing the commodity futures market for nearly 30 years. Today President Fang has also talked about continuing to strengthen opening up of the market, to further enhance the impact and pricing ability of China’s commodity futures market.
Under this background, as in the developed market found bridgehead, outpost and testing ground by China's securities and futures markets, the development of CEINEX is not isolated, but synergistic with the development of the domestic securities and futures markets. Under the background of opening-up , CEINEX has tried to introduce the first CSI 300 ETF future in spring of 2016 to meet the market demand. In the next step, we will continue to coordinate domestic and foreign policies. Chairman Fang has just in his speech expressed the support to CEINEX for enriching CEINEX’s product lines and for providing overseas investors with China-related capital risk management tools. In the future, CEINEX will assist the opening up of the domestic market, promote the connectivity between the European market and the domestic market, introduce related risk management instruments in various ways, serve international investors and support the further opening up of Chinese domestic capital market .
[ Focus both on spot and derivative market, establishment of a platform for cross-broad investment and financing in Europe]
In opinions of many Chinese friends and colleagues, the mission of CEINEX is merely to establish a derivative market in Europe. In fact, CEINEX focus both on the spot market and derivative market equally . In addition to futures and derivatives, CEINEX will establish a platform for cross-border investment and financing in Europe. Currently, we have ETF products and bond products for trading. Two weeks ago, China Development Bank successfully issued the first Green Silk Road bond in the international market and listed it on CEINEX platform. Our current priority is promoting outstanding Chinese manufacturing enterprises to issue D-shares on CEINEX platform (D refers to Germany). We help Chinese outstanding manufacturing enterprises to go outside, go into Europe and go global. At the same time, we will assist the implementation of international strategy under "One Belt, One Road" initiative and help enterprises to achieve their globalized layout: firstly, we serve the overseas financing needs of Chinese enterprises ; secondly, Chinese enterprises urgently need to promote their brand image for the international development which is more important than financing. With the help of CEINEX’s platform, the purpose could be well-served; thirdly, basing in Germany even in Europe, where the complete and developed manufacturing industrial cluster was established, helps our outstanding Chinese manufacturing enterprises to gain international trust and to facilitate future international cooperation and cross-border mergers and acquisitions. Thank you!