China should accelerate opening commodities futures to overseas investors and detail regulations allowing domestic firms to trade raw materials contracts on bourses abroad, Shanghai Futures Exchange Chairman Yang Maijun said in proposals to the National People’s Congress.
Government agencies including foreign exchange regulators and the tax bureau should use preparations already under way for crude oil futures trading to prepare similar policies allowing foreign investors to trade base metals, precious metals and natural rubber futures, Yang said, according to an e-mail from the exchange today.
Yang, a delegate to the annual congress, which began in Beijing last week, also suggested institutional and individual investors from abroad should enjoy preferential tax rates, according to the statement.
China introduced a Qualified Foreign Institutional Investor program in 2002, allocating quotas to non-Chinese funds that were initially restricted to trading stocks and bonds listed on exchanges. In July 2012, China allowed entry into the interbank market, which hosts 99 percent of the nation’s debt.
The SHFE is facing rising competition from the Hong Kong Exchanges & Clearing Ltd., which bought the London Metal Exchange last year and has plans to boost the LME’s activities in Asia.
Chinese companies are disadvantaged because they don’t have legitimate channels to access overseas commodities futures markets to hedge, today’s statement cited Yang as saying.