Major Financial Market Organizations in Shanghai
1. Shanghai Stock Exchange (SSE)
The Shanghai Stock Exchange (SSE) was founded on Nov. 26th,1990 and in operation on Dec.19th the same year. It is a membership institution directly governed by the China Securities Regulatory Commission(CSRC). The SSE bases its development on the principle of "legislation, supervision, self-regulation and standardization" to create a transparent, open, safe and efficient marketplace. The SSE endeavors to realize a variety of functions: providing marketplace and facilities for the securities trading; formulating business rules; accepting and arranging listings; organizing and monitoring securities trading; regulating members and listed companies; managing and disseminating market information.
After several years' operation, the SSE has become the most preeminent stock market in Mainland China in terms of number of listed companies, number of shares listed, total market value, tradable market value, securities turnover in value, stock turnover in value and the T-bond turnover in value. As at the end of 2012, there were 954 listed companies on SSE, with 26 new listings in 2012. By the end of the year, there were 998 listed stocks on SSE with a total market capitalization of RMB 15,869.844 billion, decreasing by 6.96% year-on-year, and free-float market capitalization of RMB 13,429.445 billion, up 9.31% from the previous year. The year-end total share capital of all the listed companies reached 2,461.76 billion shares, of which 1,952.13 billion shares or 79.30% were tradable. A large number of companies from key industries, infrastructure and high-tech sectors have not only raised capital, but also improved their operation mechanism through listing on Shanghai stock market.
Entering the new century,SSE is faced with great opportunities as well as challenges to further boost the market construction and regulation. Combining the cutting-edge hardware facilities,favorable policy conditions in Pudong, exemplary role of Shanghai economy, SSE is fully committed to the goal of State-owned industrial enterprises reform and developing Shanghai into an international financial center with great confidence.
2.China Foreign Exchange Trade System & National Interbank Funding Center (CFETS)
CFETS, founded on April 18, 1994, is a sub-institution of the People's Bank of China (PBC). Its core functions include: providing trading, information, benchmark and training facilities to the interbank lending, bond and FX markets, monitoring market transactions, providing services for the operation and transmission of the central bank's monetary policies, and engaging in other businesses authorized by the PBC.
CFETS headquarter is located in Zhangjiang, Shanghai, together with a local back-up center on the Bund and a remote back-up center in Beijing. Internally 16 departments comprise CFETS: General Office, FX Department, RMB Market Department, Clearing Department, Technology Infrastructure & Service Department, Technology R&D Department, Research Department, Market Data Department, International Affairs Department, Risk Management Department, Human Resources Department, Finance Department, Administration Department, Beijing Back-up Center, Beijing Market Services Department and Beijing General Services Office. For the time being, CFETS also covers 18 sub-centers throughout the country in Chengdu, Chongqing, Dalian, Fuzhou, Guangzhou, Haikou, Jinan, Nanjing, Ningbo, Qingdao, Shantou, Shenyang, Shenzhen, Tianjin, Wuhan, Xiamen, Xi'an and Zhuhai. CFETS Information Technology Service (Shanghai) Co., Ltd and CHINAMONEY Journal are full subsidiaries of CFETS. CFETS holds controlling stakes in Shanghai CFETS-ICAP International Money Broking Co., Ltd and CFETS Financial Data Co., Ltd.
3.Shanghai Gold exchange (SGE)
Shanghai Gold exchange (SGE thereafter), approved by the State Council and founded by the People's Bank of China, performs the regulated functions stipulated by Management Rules of Gold Exchange and organizes gold transactions with the principle of openness, fairness, justness and honesty. As a non-profit and self-managing legal entity, SGE carries out the following fundamental functions :
1) provide place, facilities and related services for gold transaction;
2) draw up and implement business regulation of SGE and normalize the transaction;
3) organize and supervise transaction, settlement, delivery and transportation of precious metals including gold, silver, platinum, etc.;
4) set up the system of risk management to control risk of the market;
5)set reasonable price and issue market information;
6) supervise the normal operation for its members' gold business and the timely fulfillment of contract, investigate and treat its members' violations of laws or regulations of SGE;
7) supervise gold business of assigned delivery warehouses;
8) connect international gold market with domestic gold market and strengthen the communication with international gold industry;
9) other functions stipulated by the People's Bank of China.
4.Shanghai Futures Exchange (SHFE)
Shanghai Futures Exchange (SHFE) is organized under relevant rules and regulations. A self-regulated entity, it performs functions that are specified in its bylaws and state laws and regulations. It is regulated by the China Securities Regulatory Commission (CSRC). At present, futures contracts' underlying commodities, i.e., gold, silver, copper, aluminum, lead, steel rebar, steel wire rod, natural rubber, fuel oil and zinc, are listed for trading.
Guided by the Concept of Scientific Development, Shanghai Futures Exchange commits itself to promoting the opening-up and continued progress of the capital market and construction of a harmonious market environment. SHFE adheres to the guidelines that are generalized as "legislation, supervision, self-regulation and standardization", with stability, development and innovation as a priority. The exchange organizes trading activities strictly according to the laws and rules, and fulfills its functions as a front-line regulator. SHFE endeavors to develop itself into a regulated, efficient, transparent and product-inclusive internationalized futures exchange that focuses on the metal, energy and chemical-related industrial products and the corresponding derivatives. In order to realize the functions of the futures market as price discovery and risk hedging, and serve the development of the national economy, Shanghai Futures Exchange is establishing a secure, orderly, efficient market mechanism and an open, fair, equitable and transparent market environment.
There are over 200 members now in Shanghai Futures Exchange, among which about 80% are futures brokerage firms. And the exchange has already set up more than 250 distant trading terminals nationwide.
5.China Financial Futures Exchange (CFFEX)
With the approval of the State Council and the authorization of China Securities Regulatory Commission (CSRC), China Financial Futures Exchange (CFFEX) was jointly founded by Shanghai Futures Exchange, Zhengzhou Commodity Exchange, Dalian Commodity Exchange, Shanghai Stock Exchange and Shenzhen Stock Exchange on September 8, 2006 in Shanghai, with the registered capital of RMB500 million. The establishment of CFFEX is of strategic significance to deepening reform on the financial market, perfecting the financial market system, and exercising the function of the financial market.
CFFEX aims to develop the socialist market economy and maintain the normal order of the financial market by perfecting the capital market system, exercising the function of the financial futures market, safeguarding the normal trading of financial derivatives including financial futures, and protecting trading parties' lawful rights and interests and the common interests of the public.
Among CFFEX's main functions approved by CSRC are organizing and arranging the listing, trading, clearing and settlement of financial derivatives including financial futures, formulating business management rules, carrying out self-management, releasing market trading information, and providing technology, venues and facility services.
Learning from global markets' advanced experience in trading mode and clearing system, CFFEX builds China's financial derivative market in the principle of high jump-off places and high standards, and in line with the reality of China's market.
CFFEX adopts a clearing membership, dividing its members into two categories: clearing members and non-clearing members. Specifically, the clearing members are classified into trading and clearing members, general clearing members and special clearing members. The clearing membership formed a multi-layer risk control system, thus improving CFFEX's overall risk resistance capability.
Due to the adoption of an electronic trading mode, CFFEX has no trading hall or floor traders. The bidding for the financial futures products is carried out through computer systems. Transactions are made by the trading system through automatic matching on the basis of price priority and time priority. The adoption of the electronic trading mode embodies CFFEX's efficient and transparent development idea of global clout.
Shouldering the tough task of establishing and developing China's financial futures market, CFFEX will devote itself to building a healthy, standardized, efficient, transparent, innovative and technologically advanced financial futures exchange with the guidance of the Scientific Outlook on Development and in line with the principle of steady growth and advancing with the times, thus contributing to the improvement of risk tolerance and flexibility of economy as well as the promotion of economic growth.
6.Interbank Market Clearing House Co Ltd
The Interbank Market Clearing House Co Ltd, also known as the Shanghai Clearing House, is a specialized clearing institution approved by the Ministry of Finance and the People’s Bank of China. It is a limited company set up under Corporate Law, in conjunction with the China Foreign Exchange Trade Center, the Central Securities Depository and Clearing Corporation Limited, China Banknote Printing and Minting Corporation and the China Gold Coin Corporation. Registered capital is 300 million yuan.
The Shanghai Clearing House officially opened on November 28, 2009. Central bank Governor Zhou Xiaochuan and then Shanghai Mayor Han Zheng attended the opening ceremony, which was officially hosted by Su Ning, then central bank deputy governor and director of the Shanghai headquarters of the central bank. More than 200 guests from the Ministry of Finance, the People’s Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission, the China Insurance Regulatory Commission, the State Administration of Foreign Exchanges, various policy banks, state-owned and joint stock banks, foreign banks, brokerages, financial firms and representatives from the Deutsche Bourse, the London Clearing House, Euroclear Bank and the CLS Group also participated in the opening ceremony.
Shanghai Clearing House is based in Shanghai and is committed to offering safe and efficient clearing services for market players. It is also enhancing cooperation and communication with international institutions.
The main businesses of the Shanghai Clearing House include offering direct and indirect local and foreign currencies clearing services for the interbank market, including clearing, settlement, margin management, collateral management, information services, consultancy and other relevant services.
7. Shanghai Equity Exchange (SEE)
The Shanghai Equity Exchange, set up under the approval of the Shanghai municipal government, is regulated by the Shanghai Financial Services Office. SEE was established to meet a requirement of the China Securities Regulatory Commission to build a multi-tier capital market. SEE is an important part of Shanghai’s construction as an international financial center, and an important link in China’s multi-tier capital market.
The exchange has six departments: management (investment banking), trade (brokerage), registration and clearing (market regulation), information technology, planning and finance, and an office for risk control and, human resources. The exchange is a center for financial services that include trade of collateral shares, registration and clearing, trading through agencies, business development, private placement, and mergers and acquisitions. The exchange offers various financial products and comprehensive services for primary and secondary market investors.
The exchange is committed to connecting with securities market under the aegis of the China Securities Regulatory Commission. Besides offering listed companies services such as private placement, mergers and acquisitions assistance, stake transactions, valuations and marketing, the exchange also oversees the behavior of listed companies in matters related to business operations and information disclosure. The exchange is endeavoring to nurture, supervise and encourage companies to list on the main board, the SME board and the GEM board.
The exchange actively explores functions as a center for stock trading, gathering resources, incubating listed companies and financial innovation. The exchange offers high quality services for companies and investors, striving toward the goal of adding scale and first-class services to domestic leader, and toward enhancing Shanghai’s international reputation.