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Former Vice Chairman of China Securities Regulatory Commission (CSRC), Dr. Jiang Yang, retired in June, and has been appointed as the Special-Term Professor of Shenzhen Finance Institute (SFI). On September 4, President of The Chinese University of Hong Kong, Shenzhen, Xu Yangsheng issued the appointment letter to Dr. Jiang Yang as the eighth Special-Term Professor of SFI. The other Special-Term Professors include Nobel Prize laureate in Economics, Prof. Myron S. Scholes, former Chairman of China Banking Regulatory Commission, Prof. Liu Mingkang, former Vice Mayor of Shenzhen, Prof. Tang Jie, and etc.

President of The Chinese University of Hong Kong, Shenzhen, Xu Yangsheng issued the appointment letter to Dr. Jiang Yang.

Prof. Xiong Wei, Academic Director of SFI, The Chinese University of Hong Kong, Shenzhen (CUHK-Shenzhen), and Co-editor of Journal of Finance said in the appointment ceremony that SFI was set up with the support of CUHK-Shenzhen. Its mission is to train top-notch talents, establish a global exchange platform, and function as a state-of-the-art think-tank. To achieve this mission, SFI has conferred a special-term professorship to those who will provide decision-making and consultation, open lectures and programs, and organize various academic activities for SFI.

Chairman of China Merchants Securities, Huo Da, Secretary of the Party Committee of China Capital Market Institute, Zhu Wenbin, Dean of China Capital Market Institute, Jin Liyang, Secretary of Commission for Discipline Inspection of Market and Quality Supervision Commission of Shenzhen Municipality, Li Yubai, Director General of the Research Institute of the Shenzhen Stock Exchange, He Jibao, General Manager of China Merchants Futures, Lu Gonglu, Chief Risk Officer, CRO of First Capital Securities, Yang Jian, as well as Associate Director of SFI, Wang Cong and Executive Associate Dean of CUHK-Shenzhen, Zhang Bohui attended the appointment ceremony and the “Master Forum”.

On the day before the “Master Forum”, the first physical settlement of the Chinese yuan-denominated oil futures contract started. Foreign traders were officially allowed to invest on May 4, which changed the global benchmark of iron ore to some extent. Dr. Jiang Yang started his talk with comments on these events, and then shared his opinions on the development and characteristics of China’s futures market, with respect to serving the physical economy, the pilot projects of futures market, innovations, and regulator’s exploration.

Dr. Jiang pointed out that Chinese enterprises used futures as hedging strategies to manage commodity price risk. Index futures have a stabilizing effect on China’s stock market. The futures market plays a positive role in the physical economy, but few listed companies in China make full use of it. “What problems are we facing? Among nearly 60 commodities, China has only opened two futures contracts (iron ore and crude oil) to outside investors,” Dr. Jiang said. He believed that China should open up more futures markets, which is a strong impetus for China to promote the internalization of RMB. “We should learn from experience and denominate more future contracts in yuan which would promote the use of China’s currency in global trade, and the demand of RMB would rise sharply,” he said.

The Chinese people, over 2,000 years ago, had come to understand that the tasty orange, grown in southern China, would turn sour once it is grown in the north. It emphasizes the importance of taking local conditions into consideration when developing and implementing strategies. Dr. Jiang also made a comparison between the two cities—Beijing and Shenzhen. Cultivating magnolia in Beijing needs to dig a hole for water storage while in Shenzhen, it needs a well-equipped drainage system. China’s futures market is with Chinese characteristics—led by government, dual track pricing, more retail investors, and smaller contract size. Traders are required to place a deposit before they are allowed to trade. In addition, the transmissive regulation in the futures market is unique in the world. In fact, it has been proved that the futures market with Chinese characteristics is successful. The findings of 2017 FSAP also show that China’s institutional capability of risk management in the futures market is close to the counterpart of the U.S.

The 90-minute lecture is not enough for Dr. Jiang to share all his thoughts with us. As one of the pioneers, founders and regulators of China’s futures market, Dr. Jiang has published the book Price Discovery: Futures and Financial Derivatives to expound his view on the regulation of the futures market. China’s economy has entered a new era—it needs a more “internationalized” futures market to do risk management and price discovery, which can provide services for the physical economy, and promote China’s synergistic development domestically and internationally. The book provides great insights for people with interest to discover China’s economic development.