On 24 November 2022, the Faculty of Finance of the City University of Macao held the Finance Seminar Series [11] Hengqin-Macao Cross-Border Finance Seminar – Fifth Talk at the Ho Yin Convention Centre. Mr Liang Zhao, General Manager of Guangfa Futures Development Research Center, was invited to deliver a speech titled “Futures Market Development”. Mr Zhao has served as the Research Director of Guangfa Futures Capital Management Department. He graduated with an automatic control and system engineering major from University of Sheffield together with a solid mathematical foundation and programming experience. He has participated in the mortality modeling project of the Bank of England and published English papers on volatility modeling and time series modeling in international journals. He is good at quantitative strategy and commodity fundamental strategy research, and served as a trading pioneer quantitative strategy lecturer. Guests attending this seminar include Mr Shaowei Guan, Macao Business Director of GF Securities Zhuhai Branch, Dean Adrian Cheung and Associate Dean Eva Khong, City University of Macao.

Mr Zhao first explained the origin of the futures market. A futures is a standard contract in which the buyer is associated with a "long position" and the seller is with a "short position". Futures originated from the Chicago grain trading market in the United States. At that time, the annual rise and fall of grain prices prompted people to settle in the form of forward contracts, which agreed to trade grain on a specific date at a specific price to avoid the risk of large price fluctuations to farmers, traders and processors. Futures market have many participants, high transparency, continuous and open prices, good authority, and can effectively hedge risks.

Mr Zhao introduced foreign futures markets. American commodity futures market is the largest commodity futures market in the world, with rich product history and active trading. It is a global pricing center for a variety of commodities and has an independent regulatory body. The futures exchange is a corporate-system exchange, listed on the stock exchange, and the trading methods are divided into open bidding and electronic trading. To fend off competition from Eurex Exchange, several exchanges have merged into a single trading platform. London Metal Exchange is the earliest established and the largest non-ferrous metal exchange in the world. London Clearing, an independent clearing company, is responsible for clearing business. The listed varieties include copper, aluminum, lead, zinc, tin, nickel and aluminum alloy. There is no daily limit, and is a traditional and complicated trading and delivery mode, which is relatively close to the spot market. In addition, Mr. Zhao also mentioned that the Tokyo Commodity Exchange, established in 1984 in Tokyo, was formed by the merger of the Tokyo Textile Exchange, Tokyo Rubber Exchange and Tokyo Gold Exchange. It is the only comprehensive commodity futures exchange in Japan, responsible for managing all commodity futures and options trading in Japan and one of the few futures exchanges in the world that trades a variety of precious metals.

Then Mr Zhao introduced the domestic futures market. Due to the price reform and the opening up of enterprise reform in the 1980s, the price of agricultural products fluctuated and triggered the demand for hedging. A group of scholars put forward the idea of establishing a futures market for agricultural products. At the beginning of 1988, the country organized and conducted futures market research. In view of the situation that there were too many exchanges and futures prices were difficult to achieve their roles, the government cleaned up and reorganized the futures market twice in 1993 and 1998. Since 2002, laws and regulations have been issued to regulate the development of the futures market. Mr Zhao introduced the five major exchanges, including China Financial Futures Exchange, Shanghai Futures Exchange, Dalian Commodity Exchange, Zhengzhou Commodity Exchange and Guangzhou Futures Exchange, and briefly described the development history of Guangzhou futures. Lastly, he shared with the students the development of futures trading model.

At the end of the sharing session, the students took this valuable opportunity to actively pose questions related to futures, and Mr Zhou answered in detail. The City University of Macau and GF Securities have signed a strategic cooperation agreement earlier to jointly cultivate financial talents for Macao and develop more cooperation in various aspects of the Greater Bay Area. The Seminar enables students to pay more attention to the development history and prospects of the futures market, and to gain in-depth knowledge through the financial seminar series. The Faculty looks forward to co-hosting more financial seminars with GF Securities in the future.