Father of Financial Futures see huge potential in China
(peopledaily.com.cn)
Updated: 2004-06-06 11:00

In an interview with the International Financial News, Leo Melamed, Father of Financial Futures , expressed his confidence in the potential of China's futures market. He also believes the world's futures market will sustain its boom.

As an answer to the question about the prospect of futures sector in developing countries including China, Mr. Melamed said China, Brazil and India all represent tremendous potentials. It is hard to give a accurate evaluation, though, either China or India will likely play a decisive role and become mainstream markets in the world, he added.

Also as Chairman Emeritus of Chicago Mercantile Exchange (CME), Mr. Melamed hopes CME would offer information and personnel training services to China and bring their advantages into the country.

Both Mr. Melamed and Craig S. Donohue, CEO of CME who also received the interview, stressed the increasing importance of futures market in warding off market risks. They think China's futures market is facing very similar challenges as US did 30 years ago. Financial derivatives was a perfectly strange thing in US 25 years ago about which people knew little. But now, as Mr. Greenspan, Fed Chairman, made it very clear two years ago, financial derivatives is very significant in keeping the stability of the financial market.

Mr. Melamed and Mr. Donohue agree that the effectiveness of the futures on risk control will continue to boost the futures market. As the world integration process moves on and the futures transaction keeps active, the futures market will scale up globally. And this rising momentum will not stop, Mr. Melamed concluded.

Under the leadership of Mr. Melamed, CME launched forex futures in 1972, the world's first financial futures product, followed by state bond futures, Euro-dollars futures, index futures, etc.

CME is not the only exchange which sees and seeks interests in China's futures market in its initial development stage. Brazil Mercantile & Futures Exchange set up an office in Shanghai at the end of May. It is its second office overseas with the first one in New York.

The Shanghai office will promote Brazil's exports, especially agri-products like soybeans. It will have permanent representatives from four Brazilian states. BM&F attaches great importance to interpersonal communication and the office promises to have technical information for business expansion available to enterprises in general trade and marketing personnel.

Brazil is China's largest trade partner in Latin America. BM&F estimates that the demand of hedging trading from Chinese importers will bring US$1 billion to US$1.5 billion trading volume to BM&F.

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