Wang Fenghai: The construction of China's option market has entered a fast lane

Wang Fenghai, general manager of Dalian Commodity Exchange, said in an exclusive interview with China Fortune,2019year1In January, the China Securities Regulatory Commission simultaneously approved cornoptionThe listing of three other varieties marks the beginning of the construction of China's options market, and options will become an important force in China's derivatives market.

The listing of diversified commodity options will further improve the structure and system of the derivatives market, which is conducive to attracting various financial institutions to develop more diverse products and services, attracting investors to participate in the market through asset management and other methods, and improving the overall investor structure of the market. At the same time, by communicating with the targetfuturesLinkage and the listing of option varieties will also promote more active futures market trading, more reasonable pricing, and improve market operational efficiency.

Corn options "clocking in" option varieties of the big trading houseNO.2

Wang Fenghai stated that choosing corn as the second option variety listed by Dashang after soybean meal options is inseparable from Dashang's fundamental foothold in serving the real economy. In order to implement the spirit of the No. 1 central document and give full play to the role of the futures market in serving rural revitalization and agricultural industry reform, options often give priority to agricultural products.

Corn is the largest grain variety in China, located at the top of the industrial chain, covering a long industrial chain and an important area for agricultural supply side structural reform. Wang Fenghai pointed out that under the new mechanism of "market pricing and price compensation separation", market fundamentals have undergone significant changes, price fluctuations have increased, and various industrial entities need richer and more effective risk management tools and means, The emergence of corn options not only meets the objective market demand, but the years of development of corn futures have also given them a natural advantage in conducting option trading. On the one hand, corn futures are actively traded with moderate price fluctuations; on the other hand, corn futures have a strong customer base and are suitable for option trading

Currently, all large trading enterprises in the corn industry chain50%Nationwide30Strong feed enterprise group and75%All corn starch processing companies have participated in corn futures. Data statistics display, from2016Year to2018In, the average number of unit customers participating in corn futures trading was approximately6000Home provides important support for the effective functioning of corn options after their listing.

"The listing of corn options not only provides diversified and refined new tools for industrial risk management, but also brings new opportunities for industrial risk avoidance and efficiency increase, enabling the upstream and downstream industry chain entities of corn to flexibly hedge the risk of price fluctuations, improve the risk management level, and promote the optimization, transformation and upgrading of the corn industry through the comprehensive use of futures and options tools." Wang Fenghai said that when the enterprise expects the future market price to fluctuate significantly, You can choose to buy and sell call options and put option, or you can comprehensively use hedging portfolios with different futures and options construction costs, different protection scopes, and different income structures to meet their individual needs and more accurately achieve risk management goals, Especially for option buyers, while locking in risks, they can still retain the possibility of obtaining returns. The operating mode is easy to understand and suitable for small and medium-sized enterprises with insufficient experience in participating in the derivatives market, poor risk tolerance, and weak financial strength.

Corn options assist in serving the deep development of agriculture, rural areas, and farmers

Serving "agriculture, rural areas, and farmers" has been the commitment and mission of Da Shang Institute for many years. from2005The "Thousand Villages and Ten Thousand Households" market service project launched in, and in recent years, over-the-counter options and "insurance" have been successively launched+Futures and basis trade pilot projects, and the ability of large commercial institutions to serve agriculture, rural areas, and the real economy is constantly upgrading, especially the insurance sector+The "futures" model has been written into the No. 1 central document for three consecutive years.

Wang Fenghai believes that with the listing of corn options, "insurance" fees will be reduced, and risk hedging will obtain lower costs and more efficient tools, which will help "insurance+The promotion of the "futures" model on a larger scale helps to research and develop products that meet China's agricultural conditions, industrial development, and farmers' needs to a greater extent. We attempt to introduce options based on the main form of "contract agriculture" carried out through basis trade and explore "contract agriculture"+Insurance+Futures (Rights) Pilot "provides farmers with guaranteed prices and fixed basis, more comprehensively protecting their benefits.

And in promoting "insurance+Futures "model, exploring" order agriculture+Insurance+In addition to the "futures (options) pilot" program, the characteristics similar to "insurance" also make options closely related to agricultural subsidies in the international market. Hedging agricultural product price risks through floor options is a routine operation in agricultural risk management in mature international markets.

"Usually, the government subsidizes farmers in the form of royalties and insurance premiums, which not only does not interfere with the formation of corn market prices, but also can reduce the burden of financial subsidies, which has a certain reference significance for China's agricultural marketization reform." Wang Fenghai pointed out that the Chinese government can provide farmers with effective agricultural insurance products by means of subsidy premiums. On the basis of ensuring farmers' basic income, Professional financial institutions use floor options to hedge risks and indirectly subsidize the premium of options, providing richer options for current agricultural subsidy policies.