Hainan Free Trade Port unveils Hainan Int’l. Clearing House

By Marian Rosenberg / hicn.cn / Updated: 20:29,05-January-2022

Jointly organized by the Hainan Local Financial Supervision and Administration and the People’s Government of Sanya City, the 2021 Hainan International OTC Commodities Derivatives Summit took place on December 30. Activities that took place during the summit included an unveiling ceremony for the Hainan International Clearing House and a ceremony of intent for strategic investment shareholders.

Unveiling of the Hainan International Clearing House. HAINAN LOCAL FINANCIAL SUPERVISION AND ADMINISTRATION

The term "commodities" refers to the primary raw materials for industrial production in the fields of energy production, minerals, agricultural products, chemicals, and metals. In terms of forms of exchange, commodities can be traded with fixed-price on the spot,through futures trading on futures markets, or in "one-to-one" over-the-counter (OTC) transactions including forwards, swaps, and options (all of which are collectively referred to as OTC derivatives). At more than six times the volume on trading floors, when looking at things from the perspective of the international market, it can be seen that the annual amount of various OTC derivatives can hit hundreds of billions of dollars. The market space is huge.

A new platform for the bilateral opening of the Hainan Free Trade Port that enhances both industrial agglomeration and radiation effects, the establishment in Hainan of a clearing house will become a booster for domestic companies to go global.

Intent signing ceremony between strategic investment shareholders. HAINAN LOCAL FINANCIAL SUPERVISION AND ADMINISTRATION

 The Clearing House will have four main functions: 

1. As a trading platform for commodity circulation, providing clearing services for centralized performance guarantee agreements;

2. As a risk management platform for hedging, providing personalized derivatives trading contracts; 

3. As an investment and trading platform, providing investment institutions with rich targets for commodity asset allocation; 

4. As a financial tool for enterprises to expand their domestic and foreign markets, providing the dual functions of financing and guarantees.

The companies signing agreements to invest in the Hainan International Clearing House include the China Three Gorges (Hainan) Green Development Investment Co., Ltd., CRCC Hainan Construction and Development Co., Ltd., Haken Group (HSF), Shandong Finance Group, and Jinan High-Tech Holding Group.

In the future, the enterprises and institutions surrounding the Clearing House will include traders, manufacturers, warehousing and logistics companies, financial institutions, investment institutions, and industry associations. Prices formed by transactions will create new benchmarks for domestic and international markets that are expected to become the Hainan Free Trade Port Price Index and are expected to unleash the greater influence of the FTP both inside and outside of China.



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