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Recently, the Zhengzhou Commodity Exchange (hereinafter referred to as Zhengshang Institute) cotton option listing application has been approved by the China Securities Regulatory Commission, cotton options will become the second option variety launched by Zheng Shang. This is a major measure taken by Zhengshang Institute to implement the policy spirit of “Deeply Promoting the Construction of Agricultural Products Futures Options Market” in the No. 1 Document of the Central Committee, which will further enhance the ability and level of the futures market to serve the real economy.
The relevant person in charge of Zhengshang Institute stated that Zhengshang Institute will follow the unified deployment of the CSRC, strengthen overall coordination, conscientiously do a good job in market organization, rulemaking, technical system preparation, investor education, etc., and effectively improve market supervision and risk prevention. System, do market training and publicity work.
In recent years, Zhengshang Institute has actively carried out the construction of the commodity option market to serve the high-quality development of the real economy. On the basis of the smooth operation of the white sugar option, Zheng Shang has combined cotton as the second commodity option with the actual situation of the real economy and the spot market base. In 2018, Zhengshang Institute carried out various preparations for listing, and completed the draft contract design, rule combing, technical testing, market maker selection, etc., and passed the “Options Workshop”, “Three Industry” activities and video lectures. In this way, we actively trained the cotton-related enterprises in order knowledge training, and trained 750 cotton-related enterprises and 3063 person-times. In addition, cotton option simulation trading is continuing.
Recently, in the cotton option demonstration activities organized by Zhengshang, China Textile Group, Louis Dreyfus, Henan Tongzhou Cotton Industry and other enterprises said that more flexible and diversified hedging tools will help the cotton companies to be stable and refined. Management, to achieve quality and efficiency in the cotton industry and achieve high quality development, and called for the introduction of cotton options as soon as possible.
According to Wei Gangmin, the chairman of Henan Tongzhou Cotton Industry, China's cotton market is from September to August of the same year. Under the current Sino-US trade friction and new cotton purchase and sale period, cotton farmers, ginning mills, traders and cotton spinning. Enterprises are faced with cotton sales or procurement risks. The market demand for cotton options to avoid risks is relatively strong. It is hoped that Zhengshang will be able to list cotton options as soon as possible.
Market participants said that after the listing of cotton options, the first is to help innovative tools and means to provide useful reference and supplement for the current subsidy policy, and further stabilize the income of cotton farmers. Second, it is beneficial to risk management of cotton-related enterprises. There is no additional risk of buying options. The main body of China's cotton industry chain, especially the middle and lower ginning mills, traders and cotton spinning enterprises, have high capital turnover pressure and weak anti-risk ability. It is more suitable to use cotton options to manage price risks. It is conducive to the formation of the synergy effect of “policy to protect farmers and tool industry chain”. Third, it is conducive to improving the cotton “insurance + futures” pilot and exploring the cotton “insurance + options” model. To carry out cotton option trading, we can provide on-the-spot option hedging instruments for the “insurance + futures” pilot, reduce risk hedging costs, enhance insurance capacity, enrich risk control measures, and reduce cotton farmers' premium expenses, thereby improving the efficiency of “insurance + futures” pilot operation. Insurance companies and futures companies risk management subsidiaries can also use cotton on-the-spot options to design price insurance or income insurance products to explore a lower-cost “insurance + option” model.
The relevant person in charge of Zhengshang said that the next step of Zhengshang will be arranged in accordance with the CSRC's unified arrangements, strengthen overall coordination, and actively prepare for various listings. According to market feedback, improve cotton option contracts; conscientiously carry out technical system joint testing and joint adjustment to ensure the safe operation of technical systems; complete market maker selection and agreement signing, and conduct investor education in a solid manner to ensure the smooth launch and smooth operation of cotton options.
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