The Shanghai Futures Exchange (SHFE) is finalizing a five year development plan (2013 – 2017) that will open up a variety of derivatives contracts and options to foreign access.
The SHFE will simultaneously develop crude oil, index, and metals futures, alongside financial derivatives.
“The exchange will move towards opening up to overseas players over the next five years and aims to become an important pricing centre for global commodity markets,” said Chairman Yang in a statement issued yesterday.
Currently Chinese regulators demand steep capital requirements from foreign entities, which must be registered in China as a “non-financial unit.” It remains to be seen exactly how this regulatory structure will change over the next five years, or whether significant extra-territoriality disputes my develop between China and foreign regulators.
In the meantime, U.S. regulators have mostly shied away from enforcement against China-based firms. One exception to this rule came in September, when the CFTC announced an enforcement action against Weidong Ge and Sheenson Investments, Ltd, which are both based out of Shanghai.
The $1.5 million penalty against Weidong Ge and Sheenson was borne out of an event that took place three years prior. Apparently, both firms exceeded position limits – now under appeal – for soybean oil futures.