Caixin
Apr 01, 2021 07:03 PM
FINANCE

China Takes a Step Closer to Creating First National Commodity Indexes

What’s new: A company created to provide China’s first national commodity indexes started operations Wednesday, according to an official statement (link in Chinese), in a move to satisfy growing investor demand for tools that allow them to speculate on future price changes and help them hedge their risks.

The new company, China Securities Commodity Indexes Co. Ltd. (中证商品指数有限责任公司), was established on Dec. 16 with a registered capital of 1 billion yuan ($152 million) in the Xiongan New Area, an economic zone near Beijing, according to public business records (link in Chinese).

The new index provider is owned by four futures exchanges — the China Financial Futures Exchange, the Dalian Commodity Exchange, the Shanghai Futures Exchange and the Zhengzhou Commodity Exchange — with each holding a 25% stake in the new company. The latter three primarily accommodate commodity futures products.

A source close to the China Securities Regulatory Commission (CSRC) told Caixin that although each commodity exchange has its own futures indexes, there are no unified national commodity indexes across markets.

CSRC Vice Chairman Fang Xinghai said in the statement that the new company will integrate resources in the futures index industry to compile new commodity indexes, which should be conducive to the supply of the country’s high-quality index products.

The background: Compiling national commodity indexes is seen as significant because they can provide a foundation for all kinds of derivatives needed to meet the hedging and investment needs of futures traders and provide early warning signs about the country’s macroeconomic situation, the source said.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full story in Chinese, click here.

Related: Exclusive: China Eyes National Commodity Indexes as Demand Grows for Hedging Tools

Contact reporter Timmy Shen (hongmingshen@caixin.com) and editor Marcus Ryder (marcusryder@caixin.com)

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