A few days ago, Zhengzhou Commodity Exchange issued the "Announcement on the List of Cotton Options Market Makers". According to the "Measures for the Management of Markets by Zhengzhou Commodity Exchanges", CITIC Securities Co., Ltd. and COFCO Qi Defeng Investment Service Co., Ltd. were confirmed. 12 companies such as the company are market makers of cotton options.
According to this announcement, the institutions listed as cotton option market makers are CITIC Securities Co., Ltd., COFCO Qi Defeng Investment Service Co., Ltd., Zhejiang Nanhua Capital Management Co., Ltd., China Merchants Securities Co., Ltd., Yinhe Derui Capital Management Co., Ltd., Luzheng Economic and Trade Co., Ltd., CITIC China Securities Capital Management Co., Ltd., Zhejiang Zheye Industrial Co., Ltd., Shanghai Haitong Resources Management Co., Ltd., Zhejiang Jihai Trade Development Co., Ltd., CITIC Jiantou Securities Co., Ltd., Guohai Liangshi Capital Management Co., Ltd.
It is understood that in order to prepare for the cotton option listing, Zhengshang Institute publicly collected cotton option market makers in the whole market in July 2018. After material review, simulation test, on-site inspection, etc., Zhengshang selected 12 out of 36 applicants: 3 of them were the original white sugar option market makers according to the Zhengshang Institute's option market makers' quality evaluation plan. 》Get the highest assessment rating and directly become the cotton option market maker; the other 9 institutions are selected according to the comprehensive score from high to low. Judging from the results of the selection, the 12 institutions that have obtained the cotton option market maker qualifications include three brokerage firms and nine futures company subsidiaries. The relevant person in charge of Zhengshang Institute said that Zhengshang will continue to optimize the options market making plan and pay more attention to actual performance. At present, Zhengshang is launching a market-prepared qualifier that is highly close to the real market. This activity lasts for one year and hopes to select a candidate institution that can provide better market-making services for the market in the form of “Rally”.
In the 1970s, on-the-spot option trading was born. The option trading spreads the risk of a futures contract to a series of option contracts through different execution prices. Therefore, the execution price of an option contract derived from the same futures contract can be as many as one hundred. Excessive execution prices make the option investment very fragmented, and some execution prices are often not traded or traded very little. In addition, the option pricing itself is more complicated. Therefore, the liquidity of the option contract after refinement is poor. Therefore, the option trading introduces a market maker system, which provides a continuous two-way quotation for the option trading through the market maker.The increase in trading activity has increased market liquidity and promoted the rapid development of the options market. At present, most of the derivatives exchanges in the international market have introduced market makers. Since the listing of white sugar options in 2017, Zhengshang has introduced a commodity option market maker system. The number of white sugar option market makers is 10.
As the first batch of white sugar option market makers in Zhengshang, CITIC Securities was once again selected as a cotton option market maker. The relevant person in charge of the company said that the cotton option market maker selection process is open and transparent, and the simulation competition rules are clear and reasonable, which has played a good simulation role for the market maker's real trading. “We attach great importance to this cotton market maker application, and we are actively preparing for market application from July 2018.” The person in charge said that CITIC Securities has accumulated some experience in the trading of commodity options, targeting cotton options trading. The system and market-making strategy are ready, with confidence to maintain a consistent level, complete market-making obligations, and contribute to the smooth operation of cotton options.
Haitong Resources related person also said that cotton option is the second option product of Zhengshang, and the cotton option listing will provide flexible risk management tools and trading strategies for related industries, and further improve the function of futures market. It is of great significance to promote the high-quality development of the real economy. Haitong Resources has made sufficient manpower and capital preparation for preparing cotton option market making business, and actively participated in the production environment simulation test organized by Zhengshang Institute to verify the stability and flow control of the market making system, and to do multiple varieties at the same time. The city is ready.