Newedge, the world’s largest futures broker, is to offer access to four Chinese futures exchanges, as overseas investors look to tap the country’s slowly liberalising financial markets.
The French group will use a platform provided by Ffastfill, the UK-based software provider to connect clients to the Shanghai Futures Exchange, the Dalian Commodities Exchange, the Zhengzhou Commodities Exchange, and China Financial Futures Exchange.
The plumbing of the markets - in equities as well as derivatives - has emerged as a fast-growing business as investors seek liquidity in emerging markets around the world. As the world’s most populous country, China is regarded not only as one of the biggest untapped markets but also as one of the most difficult to access.
New financial products are slowly being introduced as China steadily transforms its securities markets to more closely mirror those of market-based economies. Stock index futures began trading on mainland China earlier this year, while short-selling and margin trading have also been introduced. SunGard, a trading technology group, is to offer direct market access (DMA) to qualified foreign investors to trade Chinese stock index futures next year.
The Shanghai Futures Exchange is regarded as one of the world’s three base metals price-setting centres along with the London Metal Exchange and Comex, the New York metals exchange.
Dalian specialises in soyabean futures while Zhengzhou trades wheat, sugar, cotton and rapeseed oil. CFFEx is the only financial futures exchange in China, and trades the country’s first financial future, the CSI 300.
“This is the first platform to offer access in English to Chinese exchange contracts,” said Mike Frawley, global head of metals at Newedge. “Clients will be able to trade Chinese and other global contracts as a single order, spreading between any two contracts offered from around 45 exchanges on this platform.”
“This initiative shows we are very committed to China and the development of our franchise there,” said Laurent Cunin, Newedge’s Asia Pacific Regional head. “The Chinese futures markets have a potential to grow further.”
Ffastfill will connect to the exchanges via Newedge’s joint venture with China’s Citic group as Chinese regulations prevent many foreign companies from trading directly on Chinese exchanges.
Newedge is a member of 14 derivatives exchanges in Asia and employs more than 500 staff in the region. The company has a presence in eight countries.
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