Introduction on CNY MEG swap and central counterparties clearing business
！！Chu Jiewang, Shanghai Clearing House
2018-03-30 12:40:28
Chu Jiewang, Shanghai Clearing House, presented his report of Introduction on CNY MEG swap and central counterparties clearing business 
He firstly made an introduction to business of Shanghai Clearing House. It is an important financial market infrastructure approved and directed by the People's Bank of China (PBC). It mainly works on clearing (250 trillion Yuan in 2017) and issue and trusteeship of bonds (mainly credit debt of over 90% companies).
Then he introduced RMB MEG Swap as followings. 1. Agreement factors: including contract size (100mt/lot), last trading day (The 25th day or the working day before the 25th in case of holiday), settlement day, settlement price, etc. 2. Swap trade mode (by brokerage firms) and clearing mode (agent clearing and direct clearing). 3. Market participant responsibility. 4. Trading and clearing fees of traders. 5. Risk Control System. 6. Market service subject (Clearing members, Broker like Zhejiang Ruiyi). 7. Investors type (China¨s trader, downstream plant, producer etc.). 8. Margin agreement. 9. The advantages of chemical swaps (eliminating default risks and reducing capital occupation).
Thirdly, he presented some case studies on hedge and arbitrage like upstream and downstream hedging, cross-region hedging, contract arbitrage, online and offline arbitrage and cross-market arbitrage.
Fourthly, he compared market in the field and over-the-counter market: there is price change limit in the market in the field while not price change limit in the other one.
Fifthly, he described plans on chemical derivatives. RMB MEG swap has started since Jan 2018 and then RMB swap on methanol, benzene, PX etc. will start phase by phase.
He firstly made an introduction to business of Shanghai Clearing House. It is an important financial market infrastructure approved and directed by the People's Bank of China (PBC). It mainly works on clearing (250 trillion Yuan in 2017) and issue and trusteeship of bonds (mainly credit debt of over 90% companies).
Then he introduced RMB MEG Swap as followings. 1. Agreement factors: including contract size (100mt/lot), last trading day (The 25th day or the working day before the 25th in case of holiday), settlement day, settlement price, etc. 2. Swap trade mode (by brokerage firms) and clearing mode (agent clearing and direct clearing). 3. Market participant responsibility. 4. Trading and clearing fees of traders. 5. Risk Control System. 6. Market service subject (Clearing members, Broker like Zhejiang Ruiyi). 7. Investors type (China¨s trader, downstream plant, producer etc.). 8. Margin agreement. 9. The advantages of chemical swaps (eliminating default risks and reducing capital occupation).
Thirdly, he presented some case studies on hedge and arbitrage like upstream and downstream hedging, cross-region hedging, contract arbitrage, online and offline arbitrage and cross-market arbitrage.
Fourthly, he compared market in the field and over-the-counter market: there is price change limit in the market in the field while not price change limit in the other one.
Fifthly, he described plans on chemical derivatives. RMB MEG swap has started since Jan 2018 and then RMB swap on methanol, benzene, PX etc. will start phase by phase.
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