Chinese state-run companies were authorized by the China Securities Regulatory Commission to have hedge transactions at the Brazilian Mercantile & Futures Exchange, given they report to CSRC for record, through member brokerage houses. BM&F also signed a Memorandum of Understanding with the Zhengzhou Commodity Exchange (ZCE).
The authorization coincided with the first official Chinese futures market regulatory delegation visit, on Friday, June 24th 2005, to the Brazilian Mercantile & Futures Exchange headquarters in São Paulo.
The delegation was headed by Mr. Maijun YANG, Chief Director-General of the Department of Futures Supervision of the China Securities Regulatory Commission (CSRC). Participating in the delegation were also: Mr. Jun LI, Division Director of the Department of Supervision of the China Securities Regulatory Commission (CSRC); Ms. Lijian LIU, Deputy Director of Income Tax Department of the State Administration of Taxation; Mr. Xiaoli GUO, Executive Vice-President of the Dalian Commodity Exchange (DCE); Mr. Xiaofeng YIN, Director of the Beijing Representative Office of the Shanghai Futures Exchange (SHFE); Mr. Xianli WANG, General Manager of the Zhengzhou Commodity Exchange (ZCE); and Mr.Wengguang ZHAO, Head of Marketing Department of the Zhengzhou Commodity Exchange (ZCE).
The delegation’s objective was to examine the development of Brazil’s derivatives market and the technologies behind transaction procedures, netting and settlement of BM&F’s financial and agricultural futures and options contracts. The Chinese delegation also visited soybean production, commercialization and export structure in the states of Mato Grosso and Paraná. During their mission, the group visited in addition Brazil’s Securities Exchange Commission (CVM), observing the regulatory and supervision environment of the Brazilian financial markets.
The delegation also took part in the Memorandum of Understanding agreement signing ceremony between BM&F and the Zhengzhou Commodity Exchange. The agreement aims to promote the exchange of information, employee training, and to sponsor seminars together. BM&F has similar agreements with the Shanghai Futures Exchange and the Dalian Commodity Exchange.
The Zhengzhou Commodity Exchange was founded in 1990 and is one of the three futures exchanges in the People’s Republic of China, remaining active and operational during the consolidation process of the country’s derivatives industry, when the Chinese government, in 1994, reorganized the country’s more than fifty futures exchanges.
The ZCE has 218 member brokerage houses and is an electronic market, where the client has access to the Exchange’s trading systems. The contracts traded at the ZCE are: wheat (10 tons) and cotton (5 tons) futures with physical delivery. In 2004, ZCE had 25 million contracts traded and an open interest of 150 thousand contracts; until the end of May 2005 12.5 million contracts were traded and an open interest of 180 thousand contracts.