J.P. Morgan Futures is optimistic about Shanghai oil futures contract, said Rochelle Wei in an interview with China Global Television Network (CGTN).
The Shanghai Futures Exchange successfully completed China's first-ever delivery of crude oil Friday. It consisted of a total volume of 601,000 barrels, and a delivery amount of 293 million yuan (42.6 million U.S. dollars).
On March 26, 2018, China launched trading of the yuan-denominated crude oil futures contracts, the first of its kind listed on the Chinese mainland open to overseas investors, at the Shanghai International Energy Exchange( INE).
On the same day of the launch, J.P. Morgan announced that it can facilitate trading and clearing of Renminbi-denominated crude oil futures contract for both its onshore and offshore clients.
"There are a lot of client interests, they would like to trade INE crude oil," said Wei.
The new yuan contracts are expected to wrest some control over major global benchmarks including London's Brent Crude, which is more traded as a financial product than a commodity contract, and New York's West Texas Intermediate (WTI) that mainly reflects market conditions in the North American region.
"INE took a short period of time, to develop the market into a meaningful size, and it already shows influence to the WTI and Brent contracts," aid Wei.
Moreover, opening China's futures markets requires changes of the mindset.
"I think now is the time to accept more foreign participants," said Wei. “With China's commitment for further opening up the capital market, it will provide a bold role for RMB internationalization. From the industry's perspective, it allows them to enhance against global oil price volatility, and help them discover oil prices from a domestic production perspective."
Overall, J.P. Morgan sees positively about the prospect of the yuan-denominated crude oil futures as a key regional benchmark.
"From the regulator and exchange point of view, China's futures market will be more open. There are some contracts in preparation for internationalization, this market will continue to open up to international investors. In terms of the outlook, we are very optimistic, that China will play a more and more important role in terms of the global economies, we look forward to the success in the next round of reform and opening up," said Wei.
Sources:cctvplus
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