Despite the enormous numbers of derivatives being traded on China’s exchanges, the authorities are clearly more intent on establishing secure, non-speculative markets than on promoting volume growth. Colin Packham reports.
There is an inherent contradiction in China’s position among the world’s biggest producers and consumers of many metals — while prices are still set in the traditional trading centres of the London Metal Exchange and New York Mercantile Exchange.
Why isn’t China the price discovery home for these commodities?
The short answer is regulation.
There is often an enormous amount of red tape to be dealt with in the country. Listing a new contract, for example, in theory requires a simple approval by the Chinese Securities Regulatory Commission. But, in practice, the process is more convoluted. The CSRC will not approve a product unless a consensus has been formed by the State Council and almost any ministry...