The Two Expansion Of MSCI Is Expected To Improve The Futures Trading Arrangement.

Market participants suggest that further improve the futures trading arrangements and create a new situation for opening up to the outside world.

Unprecedented demand for risk aversion

Recently, MSCI announced that the semi annual results of the index examination will be announced on its official website in Beijing on the morning of May 14th.

According to the plan, China's A share will be increased from 5% to 10%, while MSCI will also incorporate 10% of the factors into China's gem A shares.

The adjustment will take effect at the end of May, making the market more hopeful to further improve the stock index futures trading system.

In early March of this year, MSCI announced that it intends to gradually expand the A share's inclusion factor in the MSCI global benchmark index. Through the "three steps" in May, August and November this year, the A share will be increased from 5% to 20%.

MSCI related responsible person once said at the conference call, "three steps" after completion, A shares will welcome 80 billion US dollars increment fund, approximately Renminbi approximately 540 billion yuan.

The relevant institutions estimate that the A share market price earnings ratio is 16 times, and the Dow Jones index's P / E ratio is 19 times. For the international institutions with global allocation of funds, the attraction of the Chinese market is quite attractive.

"MSCI expansion is expected to bring 460 billion yuan of incremental funding."

Haitong Securities Research Institute futures director Gao said, but taking into account the high turnover and volatility in the A share market, foreign investment in value investing is more urgently needed for stock index futures and other risk management tools.

Wang Jun, President of the founder's Futures Research Institute, said that raising the proportion of A shares in MSCI would first expand the international influence of A shares and drive foreign capital inflow.

Including passive configuration with MSCI index as the tracking target and active configuration of reference MSCI index, will increase the demand for domestic stock, and accordingly raise the risk hedging demand of this part of the funds to A stock, which will increase the participation and activity of hedge fund in stock index futures.

In fact, A shares are undergoing a profound change: from the performance of A shares, despite the recent decline, northward capital continued to show a net outflow, but there are still more than half of stocks have been opposed to the north to increase capital holdings.

From the central bank data, as of the end of 3, foreign institutions and individuals holding A shares market value of 1 trillion and 680 billion yuan, from the same period of public funds held A shares market value of 1 trillion and 950 billion yuan, only 262 billion 100 million yuan.

Previously, the market value of foreign capital holdings and the market value of public fund holdings were up to 1 trillion and 237 billion 685 million yuan.

Market participants say that all kinds of international indexes have brought China's market into the A stock market, which will bring incremental capital. China's stock market is still cheaper than the major stock markets in the world, and the speed of opening up is increasing. In emerging market countries, economic growth is stable and funds have a good return.

Under these factors, long-term foreign capital will continue to flow into A shares.

Stock index futures, as an important risk management and product innovation tool for institutional investors, need to be fully functional and open to the outside world.

Wang Jun analysis said that the current news shows that communication services, finance, and non essential consumption accounted for more than 20% of the weight in the process. Especially the latter corresponds more to the Shanghai and Shenzhen 300 index or the Shanghai Stock Index 50 index, so it may have greater demand for IF and IH contracts, and the impact will be more.

And from time to time, will first be included in the large cap stocks, and then gradually extended to small cap stocks.

Therefore, the impact of stock index futures hedging will start from IF and IH, and gradually expand to IC.

"Stock index futures are effective tools for investors, especially institutional investors, to avoid systemic risks in stock market, and play a positive role in stabilizing the spot market and resolving systemic risks."

Chen Jiao, a researcher at Huatai futures, said that stock index futures, as a tool for asset allocation, enriched investment strategies and improved the consistency and weakness of stock trading strategies, and improved the overall allocation efficiency of funds.

Constantly improving the futures trading arrangements

The increasingly perfect institutional arrangements in the futures market will help to really play the role of price discovery and hedging.

Related people pointed out that taking stock index futures as an example, the lack of liquidity and the high hedging cost affected the price discovery function.

Only by constantly improving the institutional arrangements can we avoid the phenomenon of inactivity and impeding price discovery.

In recent years, the variety and scale of China's futures market have maintained rapid growth, and financial futures are also expanding and improving their structure.

Although financial futures once entered the "quiet period" after the stock index was restricted in 2015, financial futures were once again activated with the improvement of Treasury futures and the adjustment of the four trading system of stock index futures. In recent years, both trading volume and positions have been significantly warmer. The turnover ratio has remained at around 1, indicating that the market turnover is more rational.

Of course, if we want to further play the role of financial futures to avoid financial risks and optimize the management of funds, we need to further enrich the financial futures varieties and tools, and improve the matching mechanism of market mechanisms and systems.

In April 19, 2019, CICC announced that further adjustment of stock index futures trading arrangements was the first change since 2019, and the fourth adjustment since 2015.

In contrast with the previous 3, the regulatory caliber has changed from easing restrictions on stock index futures to normalizing.

The specific adjustment includes three aspects: first, since the settlement date in April 22, 2019, the margin standard of the 500 index futures trading of the China securities market has been adjusted to 12%; two, since April 22, 2019, the regulatory standard of the over trading behavior of stock index futures has been adjusted to 500 hands of single contracts, and the number of hedging pactions has not been limited; three, since April 22, 2019, the standard of stock index futures trading has been adjusted to 3/10000 points four or five of paction volume.

Fang Xinghai expressed high recognition in April 21st.

"CICC announced on Friday that measures to normalize the trading of stock index futures are a good move.

The OTC derivatives market is still in the initial stage compared with the market.

The next step is to focus on the needs of the real economy and continue to increase the supply of products and tools outside the venue.

He said.

According to China Securities Journal reporter statistics, this is the third time this year Fang Xinghai referred to normalization of stock index futures.

In January 12th this year, he attended the twenty-third (2019) China capital market forum held by Renmin University of China. He said that the stock index futures had relaxed the trading measures for the three time. So far, the average number of open positions per day has been limited to 50 hands. This is not enough, and it needs further liberalization.

In March 8th, he said once again that the policy of further liberalization of stock index futures will be launched as soon as possible.

"After four trading system adjustments, stock index futures have been gradually accepted and affirmed by the market, especially the price discovery and risk avoidance functions of stock index futures have been re emphasized. This is also a milestone in the gradual maturity of China's capital market."

Gao said that in 2019, stock index futures should further improve trading system arrangements and speed up the pace of opening up.

In addition, people close to the regulatory level said that in order to further enrich the series of hedge products, CIC's long-standing stock index options are actively promoting the listing in the year.

Further promoting the opening of the futures market

The pace of opening up the futures market is speeding up.

In August 24, 2018, the SFC formally issued the "Regulations on the management of foreign investment Futures Company". It is said that the foreign institutions that meet the requirements from now on may apply to the SFC, with no more than 51% of the Futures Company shares held, and the shareholding ratio will not be restricted after three years.

In March 26, 2018, crude oil futures were officially listed on the Shanghai International Energy Exchange Center under the Shanghai futures exchange, becoming the first futures variety to be opened to overseas investors.

In May 4th, the Dalian Mercantile Exchange's introduction of iron ore futures into foreign investors was officially launched as the second international futures variety.

In November 30th, the Zhengzhou Mercantile Exchange PTA futures joined the ranks of international varieties.

The three commodity futures exchanges have completed the start of the internationalization of the varieties.

"Opening reform and promoting development is a successful experience summed up in the development of our country in the past 40 years. We will continue to open up to a higher level, wider scope and more ways this year.

We must adhere to the path of opening specific varieties, and actively promote the opening of specific varieties including stock index futures. At the same time, we must do well in the process of docking in the open process. In the premise of guarding the bottom line of risk, we should connect the international standards, enhance the inclusiveness of the system, and facilitate the entry of the foreign exchange market to enhance the market attractiveness.

On April 21, 2019, Fang Xinghai, vice chairman of the China Securities Regulatory Commission, delivered a speech at the thirteenth China Futures analyst and OTC derivatives forum.

In particular, Fang Xinghai put forward stock index futures, which gave the industry more expectation for the opening of financial futures.

In fact, with the accession to the international index, foreign institutions are increasing the allocation of domestic capital market, and their demand for risk management is also gradually improving.

It is understood that the opening of financial futures has also become one of the most important tasks of CICC recently. In addition to stock index futures, related programmes of treasury bond futures have also been reported to regulatory authorities.

Cai Chao, a macro researcher at Huatai futures, believes that the opening up of the futures market after opening up and internationalization 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 structure of futures investors will continuously improve and increase the depth of market participation, which will help to enhance the international influence of China's futures market and the corresponding varieties.