It can be expected that once the high value-added products characterized by electronicization are combined with financial futures, the futures market will inevitably be introduced into the 3.0 era. Since then, the service function of the futures market is not only reflected in the traditional production and consumption fields, but also can keep pace with the times to further meet the risk management needs of information production and consumption.
Editor's note:
After more than 20 years' development, the function of China futures market in serving the national economy is increasingly reflected, but there is still great room for efforts in deepening the existing varieties, deepening the correlation with related industries and better serving the real economy.
Based on the reality of the development of China's real economy, this paper breaks through the existing futures theory, aiming at exploring more effective futures varieties and trading methods in China and making the futures market play a better role in the operation of the real economy.
The theory, practice and experience of the three authors in this paper are highly complementary. In the early stage of the development of the futures market, Cao Ruming participated in the construction, standardization, development and innovation of the market as a supervisor; Xing Jingping, postdoctoral fellow of Exchange, chief analyst of securities information company. He is good at futures index research and participated in the design of the only financial futures contract in China. Ma Wensheng is a leading figure in the combination of theory and practice in China's futures industry. This combination finally contributed to the exploration and theoretical innovation of futures practice in this paper.
Futures originated from the spot, reflecting the internal demand of the development of the real economy. Futures trading is a more advanced market form based on spot trading, which is not only an extension of spot market, but also an inevitable product of its development. The futures market itself is constantly maturing in the evolution from low-level to high-level and advanced, and is struggling to innovate in order to keep up with the development of the real economy.
In-depth study of the historical origin of futures products and economic development is helpful to recognize the stage of futures market and clarify the development direction. Guided by the development track of futures market and real economy, we divide the relationship between them into three eras, namely 1.0 era, 2.0 era and 3.0 era. These three stages include the whole process from commodity futures, from financial futures and futures price index futures to spot price index futures, and returning to commodity futures at a higher level. Looking back on this process, we have a deeper understanding of the assertion that "the futures market must serve the real economy" and are full of confidence in the 3.0 era theory.
1.0 times and trading varieties
/kloc-In the middle of the 0/9th century, Chicago has developed into an important distribution center and processing center for agricultural products. However, drastic price fluctuations have plagued the production and consumption of agricultural products, and agricultural futures have emerged. The London Metal Exchange (LME), founded in 1876, is a pioneer in metal futures trading. With the world's major capitalist countries gradually shifting from agriculture to modern industrial production, the types of futures contracts have gradually expanded from traditional agricultural products to metals and precious metals. The oil crisis in the early 1970s promoted the emergence of energy futures such as oil.
In the development process of 150 years, there is no big breakthrough in the varieties of commodity futures trading. Agricultural products, metals, energy and other commodities have always been mainstream varieties, and the price formation mechanism and function have not changed substantially. This is the era of 1.0 characterized by commodity futures. This era is the result of the natural evolution of the real economy and stems from the initial demand of economic development for commodity risk management. Its characteristics are:
1. The listed varieties directly serve the real economy and industrial and agricultural production and consumption needs. This stage belongs to resource-consuming production or consumption, and the cost ratio of bulk commodities to production (or consumption) is very high. At the same time, the real economy occupies the leading position of social economy, the virtual economy develops steadily, and the commodities or industries involved in the futures market begin to develop on a large scale.
2. At this stage, the futures market is mainly caused by the pressure of large fluctuations in commodity prices that bring greater risks to enterprises in the industrial chain. Therefore, it has made outstanding achievements in price management and risk management.
3. Due to the development of economic globalization and trade globalization, the commodity market strives to find a wider, more convenient and smoother logistics channel. In order to meet this demand, the futures market has also demonstrated the ability to provide comprehensive logistics channels.
4. All kinds of information began to focus on the commodity futures market, and the basic spot market price was discontinuous. The long-short mechanism, standardized contract mechanism and leverage mechanism make the futures market more liquid and the price discovery function is obvious. The intermittent price of the spot market is used as a trading reference, but it does not affect the real-time trading function of the futures market.
5. physical delivery. Futures and spot prices converge in the delivery process, and arbitrage in the process of futures and spot trading inhibits market manipulation.
2.0 times and trading varieties
In the early 1970s, great changes took place in the international economic situation. The fixed exchange rate system was replaced by the floating exchange rate system, and financial control policies such as interest rate control were gradually abolished. Exchange rate and interest rate fluctuate frequently and violently. 1972 In May, CME first introduced foreign exchange futures contracts. 1975 10 In June, the Chicago Board of Trade (CBOT) took the lead in launching interest rate futures contracts. 1February, 982, KCBT developed the value line composite index futures contract, making the stock price index the object of futures trading.
Financial futures pushed the futures market into the era of 2.0, occupying a dominant position in the global futures market. From 20 10 to 20 1 1, financial derivatives transactions accounted for 86.7% and 88.7% of the total global derivatives transactions. The characteristics of this era are:
1. With the maturity and perfection of the financial market, the virtual economy, which has been gaining momentum for a long time, has finally stepped onto the main stage, greatly surpassing the real economy. Quantitative change leads to qualitative change, and the futures market begins to extend to financial products.
2. At this time, the international economic situation is becoming more and more complicated, and the prices of various financial products fluctuate violently. Drawing on the experience of commodity futures risk management, financial futures came into being. Financial futures directly serve the virtual economy and provide tools for the price and risk management of stocks, interest rates or foreign exchange.
3. Active financial futures trading has injected fresh blood into the financial market and brought about geometric growth. The derivatives market based on financial spot and even financial futures is developing rapidly. Soon, the financial futures market has become an important asset market serving the capital market, bond market and foreign exchange market. At this stage, the futures market almost did its best to act on the financial market, which directly promoted the vigorous development of the financial market.
4. Financial futures strive to improve efficiency on the basis of continuous prices of financial products, but the price discovery function deteriorates.
5. Cash delivery, there is no need to set up a delivery warehouse, futures and spot meet on the last trading day, and real-time arbitrage makes futures and spot become an integrated market, which is in line with law of one price.
2.5 the transitional era and trading varieties
From the end of the 20th century to the beginning of the 2nd/Kloc-0th century, with the phenomenon of global currency overtaking, there was a big bull market for commodities, and prices rose rapidly. CME and others have introduced commodity futures price index futures, among which the most famous ones are Rogers International Commodity Index (RICI), Reuters Commodity Price Index (CRB) and S&P- Goldman Sachs Commodity Index (GSCI). In 2005, the trading volume of RogersInternationalTRAKRS exceeded 36 million, ranking sixth among the global index futures contracts.
The combination of commodity futures and financial futures gave birth to commodity futures price index futures, and the futures market has since entered the 2.5 era, which is characterized by:
1. Commodity index futures have the characteristics of reflecting the comprehensive situation of commodity market prices. As an extension of the 2.0 era, financial futures derivatives have not escaped from the embrace of financial futures, and only belong to the upgraded version of the 2.0 era.
2. An index based on the futures prices of several or dozens of commodities cannot accurately represent any commodity, so it cannot serve the production and consumption of specific industries. It is mainly used to hedge inflation risks and meet the needs of wealth management. With the decrease of inflation expectations, the trading demand of such indexes will also decrease, so it is transitional. At present, the cold trading of futures contracts such as Rogers International Commodity Index and Reuters Commodity Price Index can illustrate this point.
3. The basic market comes from futures contracts, with continuous prices and high transaction efficiency. Just as the price discovery function of financial futures is obviously degraded, the price discovery function of commodity index futures is not obvious.
4. Cash delivery. It maintains the most important feature of the futures 2.0 era, and futures and indexes converge in delivery. Arbitrage and hedging transactions have become the main trading means of many institutional investors.
3.0 times and trading varieties
Since 1950s, the combination of computer and communication technology has triggered the revolution of information technology, which has made information technology quickly catch up with materials and energy and become a decisive force affecting the development of human society. The development and utilization of information resources are increasingly socialized and industrialized, and deeply integrated into people's production and life, which greatly improves the operating efficiency of modern society, improves the quality of social activities, and even creates a new social activity model. Since then, mankind has entered the information age.
In the period of industrialization or informatization, the progress of science and technology and the wide application of information technology are two important development stages in the process of human civilization, and they are also two basic signs of human modernization and post-modernization.
Based on the high degree of industrialization and scientific and technological progress, the western developed countries set off a wave of informatization in the middle of last century. The integration of information technology has promoted industrialization and further improved the operation level. Looking around the world, informatization and industrialization have entered the honeymoon period of mutual promotion, mutual influence and mutual integration.
In the information age, the global economic structure has undergone tremendous changes. The focus of economic structure has shifted from rough processing of raw materials to design and processing, and from low value-added labor-intensive industries to high value-added technology-intensive industries. At the same time, human production and life began to break away from the excessive and simple dependence on primitive natural resources, and the consumption concept began to turn to a new era with more added value as the main value.
Different from traditional industrial production, the cost proportion of copper, aluminum, crude oil and other bulk raw materials in information products has obviously decreased, while the proportion of intellectual cost has risen sharply and occupied a dominant position, and the price changes of commodities have also shown new characteristics. Therefore, the existing futures products can no longer match the spot market well and provide risk management tools for related production and consumption activities.
Under the background of industrial structure upgrading, the futures market, as a risk management tool of the real economy, must also be upgraded accordingly, otherwise it will be out of touch with the real economy and fall into the quagmire of virtual games.
In today's information society, microelectronics technology has created thousands of information technology applications. There are so many kinds of electronic products that it is difficult to standardize them. It is extremely difficult to develop a single spot finished futures contract, and it is difficult to find a risk management tool that integrates universality, practicality and operability. Considering that China's electronics industry has a solid foundation and the total sales volume of products is dominant in the world, it seems to be a "wise choice" for the futures market to serve the development of the new economy to draw lessons from the experience of the 2.5 era, compile the price index with similar products and launch the electronic market price index futures in time.
It can be expected that once the high value-added products characterized by electronicization are combined with financial futures, the futures market will inevitably be introduced into the 3.0 era. This era should have the following characteristics:
1. The strong pressure to serve the real economy has enabled the futures market to find a meeting point with the spot market at a higher level, and established close ties between them in a wider and deeper scope. Since then, the service function of the futures market is not only reflected in the traditional production and consumption fields, but also can keep pace with the times, further meet the risk management needs of information production and consumption, and make up for the obvious lag and deficiency of commodity futures under the new economic conditions.
2. The spot price index can play the role of synthesizing some commodities. In the real economy, besides commodities, there are many other commodities that are difficult to standardize. Spot price index covers the price information of a large category of commodities, which can provide reference for other commodities except bulk commodities and play a role in risk management. The coexistence of various spot price indexes, such as comprehensive, leading products, exclusive products or original devices, provides the market with various opportunities to hedge risks.
3. The basic market price is based on the commodity spot, and the price index is released according to the established time point, which reproduces the discontinuous characteristics of commodity prices and gives full play to the price discovery function of the futures market. Intermittent spot price index can be used as a reference for futures trading.
4. Due to the lack of direct physical objects for index delivery, we must learn from the cash delivery mode of financial futures. Futures and indexes meet on the delivery date. In addition, because the arbitrage function is greatly limited, it is necessary to introduce trading and risk management means in the 2.5 era.
Concluding remarks
Since its birth, the futures market has experienced the development stages from commodity futures to financial futures and * * * and financial futures. In this process, although the listed varieties of commodity futures have been increasing, they have remained unchanged, and bulk raw materials such as agricultural products, metals and energy have always occupied a dominant position. Since it has been the mainstream for a long time, it shows that it has fully played its role at the relevant level. It's just that today's world economy is very different from that of more than a hundred years ago, decades ago or even more than a decade ago. Today, with the continuous major structural adjustment of the real economy and the accelerated upgrading of the commodity market, it is time for the futures market to innovate by going up one flight of stairs.
Innovation is the banner of modern economy and the life of financial market. We have noticed that although China's futures market has played a good role in innovation, it seems that there is still a lot of room for efforts in deepening existing products, deepening the correlation with related industries and better serving the real economy. Therefore, it has become the unshirkable responsibility of all parties concerned to closely combine the reality of the development of China's real economy, break through the existing futures theory, and constantly explore more effective futures varieties and trading methods, so that the futures market can play a better role in the operation of the real economy.
After preliminary demonstration, it is basically feasible to develop China electronic product price index futures. There are similar innovation cases in overseas markets, such as the Baltic Dry Index (BDI) forward contract (BFA) listed and traded on the Baltic Exchange. Of course, the price formation mechanism, trading, settlement and risk management functions of spot market price index futures contracts still need further study.
Obviously, the theory of "3.0" didn't just appear for the segmentation of the futures market, and its source power came from the huge energy and actual demand accumulated by the rapid development of the real economy for decades. These needs are like magnets, attracting social service functions to play a role around. The financial service industry should follow the trend and provide high-quality services to the mother with due sensitivity and adaptability, which is what the service providers should do most.
More than a century ago, the United States and Britain introduced the era of 1.0 into people's sight. In the 1970s, the United States, as a global financial center, once again led the innovation of futures products in the 2.0 era. Today, China has become a pivotal force in the world economic circle, with the manufacturing industry occupying a dominant position in the international market, with electronic products accounting for 8/12. Faced with the great historical opportunity, people can't help asking: Why can't China become the leader in the innovation of futures varieties in the 3.0 era?