While China has continuously opened up its domestic capital market to foreign participation over the past decades, its commodity futures market has for a long time remained relatively inaccessible to international investors. However, with the upcoming launch of crude oil futures trading on the Shanghai International Energy Exchange (INE) on 26 March 2018, international investors can for the first time trade commodity futures directly in the PRC without the need to obtain any prior approval or quota from PRC regulators.
We believe that this marks a major step forward in China's liberalization of the PRC commodity futures market. In connection with this, we have prepared this client briefing to explain:
(1) the trading channels through which foreign investors and brokers can participate in futures trading on INE,
(2) the clearing methods and structure adopted by INE,
(3) the key eligibility requirements for foreign participants on INE and
(4) other material issues which foreign futures investors should consider.