China rolls out first shipping futures product in order to boost innovative development and opening-up
China launched the country’s first shipping futures product on Friday. The Containerized Freight Index (Europe Service) Futures Contracts were listed for trading at the Shanghai International Energy Exchange (INE).
The futures reflects freight rates for containers shipped from Shanghai to European ports, with the goal to help firms hedge against fluctuation risks in container freight prices.
The move aims “to contribute to China’s initiative to build a strong shipping industry, serve the development of Shanghai into an international financial and shipping center, help upgrade the Chinese shipping finance services, and further promote the function of futures markets in serving the real economy,” the INE said in a draft released last month.
With the Shanghai Containerized Freight Index based on Settled Rates (Europe Service) compiled by the Shanghai Shipping Exchange (SSE), the futures is the world’s first shipping futures product to rely on China’s index, and also the first index type and cash-settled futures contract in the service sector in China.
The launch and operation of the type of futures means a lot to the innovative development of China’s futures market, the country’s opening-up efforts, and improvement in the market operation’s quality, Fang Xinghai, vice chairman of the China Securities Regulatory Commission, said on Friday.
Dier Luo, sales trader of overseas institution department at Bank of China International Futures, told CGTN that the containerized freight index futures can give industry investors a financial tool to manage operational risks.
If the containerized freight index futures can be recognized by both local and overseas investors, the price can be widely used in real trade business, and that will have a huge impact on China’s entire international trade landscape and escalate RMB internationalization, Luo added.