As Chinese futures exchanges gradually increase the number of contracts that can be traded from abroad, technology providers to the global futures industry are extending their services to support inflow of trading interest.
In the latest example of the trend, Trading Technologies International is expanding the number of brokers connected to its network that can provide direct connectivity to Chinese futures exchanges.
The Chicago-based provider of trading systems, which is widely used by professional traders in the futures industry, announced a partnership with COFCO Futures on 26 September. The two companies said the partnership will support access via TT's trading screens to certain products listed on China's futures exchanges, including futures on iron ore, crude oil, fuel oil and palm olein. A TT executive said COFCO is the eighth broker on its network that provides connectivity to China's exchanges and added that several more partnerships are "in the works." ;
COFCO Futures is jointly owned by COFCO Capital, the investment arm of the state-owned agribusiness group, and China Life Insurance Company. The futures broker is a full member of all five Chinese futures exchanges and can offer both trading and clearing services to international customers.
The COFCO-TT partnership will support access to certain contracts that the China Securities Regulatory Commission, the country's primary regulator of futures markets, has opened to international trading. These include the crude oil, fuel oil, copper and rubber contracts listed on the Shanghai International Energy Exchange; the iron ore and palm olein contracts listed on the Dalian Commodity Exchange; and the purified terephthalic acid contract traded on the Zhengzhou Commodity Exchange.
Mark Pottle, TT's regional executive sales director, called the partnership with COFCO "another huge step in cementing TT's commitment to China." Over the last two years the technology company has announced similar partnerships with four other brokers: Huatai Futures, Xinhu Futures, Zhengzhou Esunny Information Technology, and the Singapore subsidiary of Shanghai Orient Futures.
Heyi Zhong, director of the institution services department of COFCO Futures, commented that his firm is looking forward to providing trading access jointly with TT as well as clearing services for international investors and professionals.
Allowing international participants direct access to futures on China's exchanges is a key step in the government's goal of internationalizing its financial markets. The move is also part of China's bid to have more of a say in pricing major commodities sold to Asia. The country is the world's largest importer of iron ore—the key feedstock in steelmaking—and the world's biggest importer of crude oil, plastics, soybeans and rubber.
Other trading system providers are pursuing similar strategies. For example, CQG, the Denver-based provider of trading systems, has signed up 14 onshore China brokers to its network and supports access to all five Chinese futures exchanges. And Pico, a rapidly growing provider of technology services for financial markets, set up a subsidiary in Shanghai in June to support clients seeking to access Chinese markets.
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