FIA Asia Derivatives Conference 2023
FIA returned to Singapore on 28-30 November 2023 for the Asia Derivatives Conference 2023. The conference serves as the gathering point for the Asia-Pacific cleared derivatives community to discuss regional and global developments, meet key vendors, and build powerful connections.
Orient Futures Singapore was honored to be part of the conference as a booth exhibitor, providing opportunities for investors to connect with the team. Investors and market partners gained insights through Orient Futures Singapore with the launch of our access to the Brazilian B3 Exchange.
This article aims to delve into the discussions held during the conference of What Lies Ahead for the Asia-Pacific Regions?
Growth of China and India Markets
Derivatives exchanges in China and India have witnessed remarkable growth in recent years, generating increased interest from traders and investment firms globally. However, accessing these markets can pose challenges, as noted by global brokers and trading system vendors operating in the region.
George Harrington, Managing Director & Global Head of Fixed Income & Derivatives - Index, MSCI, said, “Most global investors have been very clear that you cannot ignore China as a sector. Obviously, their economy has slowed down a bit, but there is still an incredible amount of opportunities.” He further added that what is more crucial for investors now is to understand “how do you then invest directly into China?”
Accessibility and Connectivity
Improvements in accessibility could support the transition to more investment and trading in China, according to Lei Li, APAC head of sales for Bank of America's futures, options, OTC clearing in Asia. She explained that clients will not trade these contracts if it is too complicated to access the markets. “The challenges clients have right now, it’s a lot around ease of access...” She added that China in particular needs more defined regulation to meet customer needs.
Alice Pocklington, executive vice president for Asia-Pacific at software provider Trading Technologies, talked about a "knowledge gap" when it comes to accessing markets in the region. A survey commissioned by TT on European attitudes towards trading with Asia, revealed that China was viewed as the most difficult market to connect to, followed by India.
Pocklington described the kinds of issues that customers bring up in their discussions with the firm. "There’s the geopolitical risk, there’s understanding the government policies, knowing how to connect, knowing who to partner with, understanding the local rules and regulations at the exchanges. These are all very legitimate questions that our customers are asking.”
Despite these challenges, Trading Technologies is seeing rapid growth in the number of customers using its systems to trade futures and options listed on Chinese exchanges, she said. “We’ve seen in the last three years alone, the participation in China markets on our platform grow by six hundred plus percent...So, yes there are challenges, but the opportunity is clearly there and it’s obviously an opportunity that people really want,” said Pocklington.
Regulations
Another key factor is regulation, and participants in the discussion commented that China has taken several steps to make its futures markets more accessible from abroad. That includes designating certain contracts as "international", meaning that they can be traded directly from overseas.
“From a regulatory standpoint, it's one of the markets that we see the fastest pace of regulatory change...we’ve seen access routes enlarge,” said Kate Simpson, APAC head of clearing product development and strategy at J.P. Morgan. She noted that there are now 15 products designated as international available through that route.
Simpson also noted the importance of participants “understanding the context,” of the regulation in these markets and the implementation and timeline of new regulation “because it can come into play incredibly quickly.”
On the other hand, Singapore continues to benefit from having a regulatory environment that operates in a way that is familiar to global brokers. Simpson commented that the Monetary Authority of Singapore is the “gold standard” for how regulators should oversee markets, but it also welcomes innovation through its sandbox program and “entrepreneurial” approach.
Benefit of QFI China Scheme
Introduced in 2013, the Qualified Foreign Investor (QFI) scheme simplifies the application process for international traders looking to invest in China's trading market. This scheme enables international traders to participate in China’s derivative market, facilitating investment opportunities. This includes arbitrage opportunities such as cross-arbitrage trading, including refined copper arbitrage trading and rubber arbitrage trading.
China offers many different derivative futures and options products under the QFI Scheme and Internationalized Products. This includes Dalian Commodity Exchange Soybean Futures, Zhengzhou Commodity Exchange ZCE PTA Futures, Shanghai International Energy Exchange INE Crude Oil Futures (Chinese crude oil futures) and more. Click to see the Full Updated QFI China And China Internationalised Products List.
Foreign investors can look to get access to the Chinese market through an Overseas Intermediary like Orient Futures Singapore.
Start Trading With Orient Futures Singapore
Being an Overseas Intermediary of Shanghai International Energy Exchange (INE), Dalian Commodity Exchange (DCE), and Zhengzhou Commodity Exchange (ZCE), when foreign clients participate in internationalised futures contracts in these Chinese markets with us, they have direct access to trading, clearing, and settlement. Our parent company, Shanghai Orient Futures, is the largest broker in terms of aggregated volume across the five regulated exchanges in China.
Orient Futures Singapore also currently holds memberships at the Singapore Exchange (SGX), Asia Pacific Exchange (APEX), and ICE Futures Singapore (ICE SG). Starting August 2023, corporate clients can also gain access to the B3 Exchange through us.
