MCX ties up with Chinese commodity exchange

India's largest commodity bourse—the Multi Commodity Exchange (MCX)—on Wednesday tied up with the Shanghai Futures Exchange (SHFE) of China to share knowledge and expertise for further development of their exchange ecosystems.

The Memorandum of Understanding was signed by Lamon Rutten, MCX Joint Managing Director and Madam Wang Lihua, Chairperson of SHFE, at the Pudong Shangri-La Hotel, Shanghai, China.

A press statement from MCX said that the Indian and Chinese commodity exchanges will share experiences, business rules, byelaws and regulations in order to ensure that the advantages of an efficient futures market are made available to the entire spectrum of users within and outside their respective countries and subject to the necessary regulatory approval.

This will include information on futures contracts traded on the exchanges along with delivery terms and conditions and risk management procedures.

Other terms in the agreement stipulate official exchanges for greater expertise sharing and training of exchange personnel, sharing of delayed trading data that emanate from each exchange for internal use of the other exchange and their members, coordination of local industry efforts in consultation with each other to enable industry participants face competition and manage price risk better.

Announcing the agreement, Rutten said: "SHFE has established a very efficient futures market in metals and other commodities and will share its experience with MCX, which itself has developed a potent futures market in bullion, base metals, energy and agricultural commodities. MCX will share its experiences in these sectors with SHFE."

Wang Lihua said that the Shanghai Futures Exchange has been dedicated to knowledge sharing and cooperation with counterparts both at home and abroad and is eager to learn from overseas derivatives markets in terms of their success in product and system innovation.

"As the world's exchanges step up industry consolidation amid the trend of increasing economic globalization, the Shanghai Futures Exchange has taken an important step by joining hands with MCX and forming a strategic partnership," she said.

She added that the singing of the MoU between the two exchanges will enable both sides to exchange information, engage in constructive cooperation and take advantage of each other's strengths."

MCX, India's largest commodity exchange is the global leader in silver futures trading and among the world's top five exchanges in gold, crude oil and natural gas futures trading.

Shanghai Futures Exchange  is organized under relevant rules and regulations. A self-regulated entity, it performs functions that are specified in its bylaws and state laws and regulations. It is regulated by the China Securities Regulatory Commission.

At present, futures contracts underlying five commodities, i.e., copper, aluminum, natural rubber, fuel oil and zinc, are listed for trading.