Futures Company Strive To Build "Moat"

The opening up of China's futures market is speeding up. Following the issuance of the "Regulations on the management of foreign investment Futures Company" issued by the Securities Regulatory Commission in August 2018, Fang Xinghai, vice chairman of the China Securities Regulatory Commission, has repeatedly said that in 2019, it will continue to promote foreign investment in a higher level, wider scope and more ways. We must adhere to the path of opening specific varieties and actively promote the opening of specific varieties including stock index futures, and at the same time, do well in the docking process in the opening process.

According to people interviewed by China Securities Journal, the acceleration of opening up of the futures market means: on the one hand, Futures Company will face all challenges and pressures from foreign investors in the derivatives market; on the other hand, domestic Futures Company will also take an opportunity to develop global derivatives business.

Overall, the futures industry will accelerate the adjustment of the pattern, which will also exacerbate the "crowding out effect". Futures Company can only build a core competitiveness "moat" only by finding the right position and laying out the layout ahead of time.

At the same time, many Futures Company, such as Huatai futures, continue to give full play to their advantages in terms of capital strength, whole business chain collaboration, off site options, investment and research, financial technology, compliance control and so on, and strive to seize opportunities and break through in the wave of industry innovation and pformation.

Perfect system arrangement and speed up opening to the outside world

Data from the China Futures Industry Association showed that the cumulative volume of stock index futures and treasury bond futures in 2018 amounted to 27 million 210 thousand hands, with a cumulative turnover of 26 trillion and 100 billion yuan, accounting for only 0.90% and 12.39% of the national market.

"From the perspective of volume structure, financial futures are nearly 9 times of commodity futures, and OTC derivatives are nearly 10 times that of the field," Chen Jiao, a macro researcher at Huatai futures, told the China Securities Journal reporter that China's current financial futures and OTC derivatives market has just started.

Chen Jiao believes that in recent years, China's futures market has maintained rapid growth both in terms of species and capital size, and financial futures are also expanding and improving their structure.

Although financial futures once entered the "refrigeration period" after the stock index was restricted in 2015, financial futures were activated again, along with the improvement of the Treasury bond futures and the adjustment of the four trading system of stock index futures.

If we want to further play the role of financial futures to avoid financial risks and optimize capital management, we will need to further enrich the financial futures varieties and tools, and improve the market mechanism and system.

Cai Chao, a macro researcher at Huatai futures, believes that there are three necessities for the current futures market to improve institutional arrangements and speed up opening up.

First of all, the institutional arrangement of futures market is improving, which helps the futures market really play the role of price discovery.

Taking stock index futures as an example, the lack of liquidity and the high hedging cost affect the price discovery function of stock index futures market.

Only when the futures market continues to improve institutional arrangements, can the phenomenon of trading inactivity impede price discovery can be avoided.

Second, accelerating the opening up will help to enhance the international influence of China's futures market.

Opening up the futures market and opening up to the outside world can provide an open platform for domestic and foreign markets in tandem, allowing foreign investors to participate in the futures market in China. By introducing participants from global industrial customers and institutional investors, the futures investors will continuously improve their structure and increase the depth of market participation, thus enhancing the international influence of China's futures market and the corresponding varieties.

Thirdly, speeding up opening up will help push Futures Company to enhance its professional level and competitiveness.

By introducing competitive and advanced business philosophy, foreign institutions will promote domestic financial institutions to integrate with the international market, learn and learn from new ideas and ways of operation, and enhance the overall development level of the domestic futures industry.

At the same time, domestic Futures Company will produce "catfish effect" in competition with international financial institutions.

Only if we have an international vision and continue to create a professional, differentiated and distinctive core competitiveness of Futures Company can we make better progress, which will largely promote the reform and innovation of domestic Futures Company.

Finally, improving the institutional arrangements and speeding up the opening up can boost the implementation of China's "one belt and one road" strategy.

A sound trading mechanism coupled with the commodity pricing ability brought by an open market environment can attract "one belt" enterprises and financial institutions to participate in China's futures market. Futures Company can provide diversified risk management services for related customers of "one belt and one road", and support related industry enterprises to hedge and manage risks in futures market, so as to provide a strong guarantee for the implementation of China's "one belt and one road" strategy.

Meeting challenges and pressures in all directions

In August 24, 2018, the SFC issued the "Regulations on the management of foreign investment Futures Company", which shows that the foreign institutions that meet the requirements can apply to the securities and Futures Commission, with no more than 51% of the Futures Company shares held, and the shareholding ratio will not be restricted after three years.

Is the wolf really coming?

The industry believes that the problem should be viewed dialectically: on the one hand, this does bring challenges and pressures to the domestic Futures Company, but on the other hand, it provides an opportunity for these organizations to develop global derivatives business.

In short, there may be a "crowding out" effect during the industry or accelerated adjustment. Futures Company can only build its core competitiveness by finding the right position and laying out the layout ahead of schedule.

Under the background of the globalization of derivatives market, the demand for real economy presents new trends and new characteristics. It extends from single enterprise risk management to the whole industry chain risk management; the market develops to the personalized demand of the OTC market; the domestic demand for insurance is pferred to the international market; the demand group is extended to the wealth management organization by the producer customers and small and medium investors.

Xu Wenyu, a macro researcher at Huatai futures, believes that in the process of pformation, Futures Company, as a link in the financial service chain, participates in the process of serving the entity. The role of Futures Company will also be pformed from the former broker to the wealth manager, asset manager and risk manager, as an indispensable part of the financial services of the industrial chain.

Brokerage business is still the basic business of Futures Company's long-term development. Risk management and asset management business are the core businesses of Futures Company's upgrading of services around the real economy.

He said that the financial supply side reform is a return to the futures market for the "pricing function". Under the background of globalization, the Futures Company with the pricing power of the domestic market will participate in the process of China's economic pformation, share dividends in the development of the real enterprises participating in China's economic pformation business; Futures Company with the pricing power of the global market will participate in the competition in the global economic pformation, and provide pricing services for Chinese enterprises and investors to participate in the global asset allocation, and for the participation of global enterprises and investors in China's asset allocation.

Promoting the development of differentiation and integration of Futures Company services will be the basic direction for maintaining the long-term healthy development of domestic Futures Company.

According to introducing, Huatai futures has made all-round preparations in five aspects: including optimizing the business layout and service system, creating a customer oriented organizational structure, accelerating the development of international business, reconstructing the underlying structure with digitalization, and implementing a market-oriented personnel system, and building a professional talent team.

Futures Company or continue to lead the brokerage business

Futures Company, a securities broker, rose in April 16, 2010 to launch stock index futures.

Before that, many brokerages entered the futures industry in large scale through acquisitions.

Backed by shareholder advantage, Futures Company, a securities brokerage company, has been developing rapidly with stock index futures.

According to statistics, in 2018, the Futures Company with a net profit of more than 200 million yuan has reached 7 Futures Company, including CITIC futures, Guotai Junan Futures, Haitong futures, Galaxy futures, Shenyang Wanguo futures, Huatai futures and China Everbright futures, of which CITIC futures net profit is more than 400 million yuan.

From the perspective of registered capital, the advantage of Futures Company is more significant.

Statistics show that only 15 Futures Company, which are currently registered capital in China, are holding Futures Company for non securities companies, and these two are brothers and equity companies of securities companies.

It can be seen from this that Futures Company, relying on the capital advantage of shareholders, can enhance capital strength more easily. The large amount of capital injection by shareholders has made the brokerage business Futures Company expand rapidly in scale, which has crossed the original accumulation of traditional Futures Company for several years or even more than ten years.

Chen Jiao believes that the advantages of Futures Company are also reflected in the following aspects:

The first is customer resource advantage.

The securities business department, Futures Company, can develop IB business and expand its business by relying on the customer resources of a large number of offline business departments of the parent company.

At the same time, the traffic resources of the parent company's parent company's website and APP client can also be a diversion for Futures Company, and the customer resources introduced are relatively better than those introduced from other business scenarios.

The two is brand advantage.

With strong strength, advanced culture and leading mechanism, securities companies have built strong brand advantages in the financial market. Futures Company can also serve customers more accurately and better depending on the brand position of the parent company of the securities company.

At the same time, with the brand effect, it is easy to attract excellent talents to join the team.

Three is financial technology and investment research resources advantages.

On the whole, the financial and technological strength of the securities companies is in the leading position of the traditional financial industry, and the research team has a large volume of business and a wide range of fundamentals. Futures Company, a securities brokerage company, can rely on its parent company and get many support in IT financial technology and investment research cooperation.

The four is to integrate resources and develop innovative business advantages.

Securities, banks and insurance have formed the core part of the financial intermediation. The securities company Futures Company can contact, utilize and integrate various financial resources through the bridge role of the core financial intermediaries of securities companies, and engage in traditional brokerage business and financial innovation business on the more advantageous financial platform to expand their own development space.

The five is the advantage of mature management and service mode.

The development of domestic securities companies, especially the head brokers, is more mature. Futures Company, a securities brokerage company, can effectively improve the management efficiency and quality by referring to the mature internal management mode, customer service system and risk management ability of the securities parent company.

"Futures Company is undoubtedly the whole business chain synergy advantage."

Chen Jiao said, with Huatai futures as an example, Huatai Securities, as a controlling shareholder, has a huge customer base, a leading Internet platform and an agile business chain system. The main financial indicators and business indicators all rank in the forefront of the domestic securities industry.

Huatai futures has established an interactive and collaborative institutional customer development and service mode with Huatai Securities by giving full play to the professional advantages of its derivatives risk management, and providing comprehensive financial services for institutional customers to provide a full business chain.