Reed Smith Client Alerts

The opening up of the futures markets for commodity products in China has been much discussed and highly anticipated. However, it looks like a crude oil futures contract, listed on the Shanghai International Energy Exchange (INE), will finally be the first Chinese commodity futures contract capable of being directly traded offshore by foreign investors. While the launch date for the INE’s crude oil contract hasn’t been announced, it is widely expected to happen before the end of 2017. Depending on the success of the crude oil contract, the INE may herald the path for other exchanges and other futures products to become accessible from offshore.

Authors: Peter Zaman Jeffrey Yang Cong Liu

Type: Client Alerts

The medium sour crude oil contract, soon launching on the Shanghai International Energy Exchange (INE), will be the first Chinese commodity futures contract accessible to foreign investors.

The principal driver behind the INE’s choice of crude oil as its first product is to allow China to develop its own benchmark for oil pricing while boosting trade in renminbi (RMB) denominated oil.

Physical settlement of crude oil futures contracts will be through the delivery of standard warrants representing crude oil, of the requisite grade, stored in bonded oil-storage facilities designated by the INE.