Playing The Role Of Stock Index Futures And Perfecting The Market Hedge Mechanism

In 2016, how to promote the reform of the stock market and the construction of the rule of law? How to promote the healthy development of the multi-level capital market? He Qiang, a member of the CPPCC National Committee, Professor of the school of finance, Central University of Finance and Economics, and director of the securities and Futures Research Institute, interviewed the international finance reporter. From the perspective of professional research, the paper gave some reasonable suggestions around the four aspects of stock index futures, stock issue registration system, stock market trading system and the new three board market.

Reporter: in 2015, China experienced a stock market crash. There was a view that the short selling of stock index futures led to the stock market crash and hampered the rescue of the market. What do you think?

In 2015, China's stock market experienced abnormal fluctuations.

The Shanghai Composite Index rose from 3234.68 at the beginning of the year to 5178.19, the biggest increase of 60.08%.

Subsequently, the stock market fell sharply, the lowest down to 2850.71 points, the largest decline of 44.95%, the stock market's ups and downs, increased the risk of investment.

Many people have misunderstood the performance of stock index futures in the abnormal fluctuation of stock market, which is that stock index futures have led to a sharp fall in the stock market.

In fact, the main reason for this stock market crash is deleveraging, which leads to a large stock market divestment, resulting in a sharp fall in the stock market.

In China's stock market, in fact, the spot trend leads the trend of stock index futures, not the other way around.

China's stock index futures market is not big enough, and its influence is not enough. The trend of stock index futures is difficult to guide the spot trend.

Judging from the operation of the market, stock index futures also play a positive role to some extent.

During the decline of the current stock market, some funds have hedged the downside risk of stock market and reduced the loss of investment through hedging of stock index futures.

For example, the cashmere Shanghai and Shenzhen 300 (160706) index fund, using stock index futures to avoid systemic risk, will benefit 1 million 500 thousand of its customers.

Because investors use stock index futures hedging, locking risks and profits, when the market falls, they are no longer eager to sell stocks, enhance their confidence in stock ownership, and improve the intrinsic value of the stock market.

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Reporter: why do we propose the concept of registration reform now?

He Qiang: for the past 25 years, there has been a reason why China has not made the registration system and has been engaged in the examination and approval system and the approval system.

Because China's stock market is full of speculation, the three stock markets are more serious, the quality of listed companies is not high, and there are many irregular behaviors in the market.

Now we have to carry out the registration system reform, but some basic situations in the stock market haven't changed fundamentally.

Under this premise, we will encounter many obstacles and difficulties in launching the registration system.

I think we must attach great importance to the problems in the implementation of registration system.

In my opinion, the conditions for introducing the registration system are not yet fully developed. If we want to introduce the registration system, we must study carefully and prepare for it.

The bow did not return to its arrow. If there was no serious research and preparation, it would be difficult to turn back.

Therefore, before launching the registration system, what we most need to do is to seriously study what problems may arise after the introduction of the registration system and how to deal with them.

Reporter: now that you are not fully mature in the registration system, what do you think are the problems?

He Qiang: in my opinion, there are eight aspects worth noting:

First, the legal system.

We know that foreign registration system and approval system have certain legal environment and legal background.

There are two major legal systems in the West: Anglo American law system and continental law system.

Different stock issuing systems are compatible with different legal systems. They are complementary.

China's related laws are very special, for example, our company law refers to the continental law system, but there are also things in common law system.

After the implementation of the registration system, our legal system will not be in a state of non integration. I think it is worth studying ahead of time.

Because registration system needs certain legal concepts, legal logic and specific legal content.

Second, the problem of the administrative system.

Under the approval system, the issuance of shares is the responsibility of the issuing department and the issuance examination committee under the approval of the SFC.

Under the registration system, the SFC will pfer the power of examination to the stock exchange.

But the two major stock exchanges are people who are appointed by the SFC and are regulated by the SFC.

Therefore, the stock exchange is equivalent to an administrative department under the SFC. The pfer of the right to issue stock audit is somewhat like the pfer of power from an administrative department under the authority to another administrative department. The power is pferred from the left pocket to the right pocket, and the administrative system has not been straightened out.

If we want to straighten out the administrative system, we must have a matching reform, that is, the two exchanges should reform from the membership system to the corporate system as soon as possible, so as to make the stock exchange independent.

Third, under the registration system, fraud is illegal.

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We have implemented a registration system. If the companies and their clients who counterfeit and issue the listed companies are too light and the cost of fraud is too low, they will play a role of encouraging fraud. A large number of companies may make use of registration to make false money.

Therefore, under the registration system conditions, we should formulate the penalties for violating fraud and write down specific clauses.

Like the United States handling the Enron incident, the counterfeiters must be severely punished. Serious offenders will go to prison so that people dare not cheat.

Fourth, how to protect the interests of investors, especially small and medium-sized investors, under the registration system.

Registration system focuses on information disclosure, and regulators mainly focus on prospectus.

In the market, China's 90% or even more than 95% are small and medium-sized investors. Small and medium investors are vulnerable groups in the market. Many people may not have the ability to identify prospectus, but can only follow blindly.

How to help them enhance their ability to analyze and judge information is of great importance in the registration system.

Fifth, the regulatory efficiency after the introduction of registration system.

The characteristics of the securities market are the high efficiency of pactions and the rapid pfer of funds.

Under the condition of registration system, if the supervision efficiency is not high enough, if the offenders find out the bad ones, the funds will run away, and who will be punished finally? Therefore, the supervision efficiency must be improved correspondingly.

Sixth, the introduction of registration system also needs to solve the problem of investor education.

At present, most investors believe that the introduction of registration system is a major negative for the stock market.

With the introduction of registration system, investors will soon think of a large number of stocks going public.

Moreover, compared with the existing listed companies, there may be a large number of companies with poor performance to go public.

Whether this is the case or not, we need to do a good job of propaganda and interpretation.

Seventh, how to effectively prevent listing fraud.

Although our approval and approval procedures are strict at present, the phenomenon of fraud still keeps on.

Why is there such a serious fraud? There is a huge price difference between the primary and the two tier markets.

This huge price gap is a great temptation of interest.

Therefore, the stock market issuing and listing fraud phenomenon.

Under such circumstances, it is a key issue for IPO to let go of the registration system and how to effectively prevent the issuance and listing of fraudulent practices.

Reporter: what measures should we take to let stock index futures play a positive role in anticipation?

He Qiang: it is mainly to improve the market hedge mechanism and enrich the market risk management means.

First, we must encourage hedging and prevent excessive speculation in the financial derivatives market.

We should learn from the lessons learned from the stock market crash, constantly optimize the trading rules, and reduce the speculative nature of the paction from the institutional level.

It is necessary to strengthen the front-line regulation, prevent irrational pactions such as excessive speculation, prevent and control market risks, and ensure the smooth operation of market norms.

At the same time, we should also do a good job of service for the hedging of institutions in an all-round way, so that hedging will become the main body of the market.

Second, we must strengthen supervision and prevent all kinds of illegal activities in an all-round way.

We should strengthen the real-time supervision and dynamic supervision of the financial derivatives market, strengthen the examination of customers, keep abreast of customer trends, and timely analyze the paction phenomenon.

We must resolutely crack down on malicious acts such as illegal acts.

Third, we should further enrich the stock market hedging tools and speed up the development of stock index options.

Although the risk management tools such as Shanghai and Shenzhen 300, Shanghai 50, China stock index 500 index futures have been launched in the market, only the stock index futures products can not fully meet the market demand from the overall development of the capital market.

In order to improve the stock market risk management system and better serve the development of the capital market, we should constantly enrich the stock market hedging tools and study the introduction of more types of financial derivatives such as stock index options.

Compared with stock index futures, the advantages of introducing stock index options are: first, different from the qualitative risk management function of stock index futures. Stock index options are quantitative, diversified and personalized risk management tools, which can simultaneously manage the directional and fluctuating risks of the market.

While avoiding market risks, investors do not give up the opportunity to make profits. Therefore, the function of "insurance" is more obvious, which plays an indispensable role in asset allocation of long-term funds.

The two is the unique asset insurance function of stock index options, which can play an important role in maintaining capital market stability.

The buyer of options can avoid the risk of market fall and flight risk by paying royalties. Stock index options can be used by investors as a fall insurance for stock assets, effectively avoiding the losses caused by the large fluctuations in the stock market.

Fourth, we should strengthen the supervision of stock index futures while paying attention to cross market supervision.

On the one hand, in the supervision of the financial derivatives market, the exchange has a very important position. It is in the front line of supervision and directly affects the healthy and stable development of the financial derivatives market. Therefore, we need to strengthen the front-line regulation of stock index futures.

On the other hand, stock index futures have the characteristics of cross market. The trend of stock index futures is determined not only by the financial derivatives market, but also by the stock spot market.

Therefore, if we want to supervise the financial derivatives market and stock index futures, we need the regulatory cooperation between futures and spot markets objectively.

The spot and spot markets should make reasonable arrangements in terms of the system structure, personnel structure and regulatory contents of cross market supervision, so as to improve the effectiveness of supervision.