CFFEX China Financial Futures Exchange

The China Financial Futures Exchange (CFFEX) is where China's financial futures and options trade. The State Council of the People's Republic of China and the China Securities Regulatory Commission authorised it, and it opened on 8 September 2006 in Shanghai.

Five institutions founded it: the Shanghai Futures Exchange, the Zhengzhou Commodity Exchange, the Dalian Commodity Exchange, the Shanghai Stock Exchange and the Shenzhen Stock Exchange. Its stated purpose is to serve the real economy and China's multi-layered capital market, by giving firms a formal place to price and pass on financial risk.

What the exchange does

CFFEX organises and oversees the trading, clearing and settlement of financial futures and derivatives. It writes the market's rules and polices them itself, publishes market data and statistics, and supplies the trading systems and infrastructure its members use. The CSRC can hand it further functions.

Trading system

Trading is fully electronic. The platform was built on practice taken from exchanges elsewhere, with high volumes in mind.

Membership and risk

Members are either clearing members or trading members. Clearing members are then split by what they may clear: trading clearing members, general clearing members and special clearing members. The split exists so that risk sits with the members equipped to carry it.

Investor protection

Three measures cover this. An investor suitability regime decides who is allowed to trade which products. Cross-market supervision catches behaviour that only becomes visible when several markets are read together — manipulation rarely stays in one venue. Abnormal trading monitoring watches for it directly. Smaller investors are who these are mainly for.

International work

CFFEX takes part in the international futures industry associations, and has signed memoranda of understanding with many of the world's major exchanges. Those agreements cover shared research, staff training and product development.