Shanghai Futures Exchange mulls links with overseas, foreign bourses

The Shanghai Futures Exchange (SHFE) is studying ways to co-operate with overseas exchanges and working on opening up its key futures contracts to foreign investors, the head of the bourse said yesterday.

The SHFE, China's largest metals exchange, plans to establish delivery points abroad as part of broader efforts to be a global exchange, the exchange's chairman, Yang Maijun, said, adding that it is exploring giving foreign institutions delivery access to warehouses in the mainland.

The SHFE is facing stiff competition from the London Metal Exchange (LME) after the acquisition of the British institution by Hong Kong Exchanges and Clearing (HKEx) brought its rival to the same time zone and country.

Co-operation could involve overseas exchanges offering the SHFE's futures contracts as an alternative for settlement prices, mutually listing each other's futures products and working together on the delivery network, Yang said at the exchange's annual conference in Shanghai.

This is the first time the SHFE has given details on possible collaboration with overseas bourses since HKEx's acquisition of LME last year. Such co-operation could pave the way for LME to set up storehouses on the mainland. At present, the central government prohibits local warehouses from being used for delivery of futures products traded on overseas exchanges.

"The SHFE is also working to open up to foreign investors … to allow overseas firms to participate in the physical delivery of goods in both tariff-free and non-tariff-free zones," Yang said in a speech at the 10th Shanghai Derivatives Market Forum.