First of all, I’d like to, on behalf of the Shanghai Stock Exchange (SSE), extend my warm welcome and gratitude to all of you attending the launching ceremony of stock option.
The sound of gong for the launch of Shanghai-Hong Kong Stock Connect still lingers in the air, and today we get together again to witness another significant moment in the reform and innovation of China’s capital market.
The launch of stock option is another achievement made by the SSE in its new round of development. As early as 2000, the SSE initiated the preliminary study and laboratory validation for option and other derivatives. Since 2013, accelerated breakthrough and full preparation have been made for stock option under the support and guidance of Xiao Gang, Chairman of the China Securities Regulatory Commission (CSRC), and Yao Gang, Vice Chairman of the CSRC, and under the direct leadership of Gui Minjie, SSE Chairman of the Governors. The successful launch of the stock option is based on our unremitting efforts and strong will. Here, we’d like to express our heartfelt thanks and respect to officials and friends from relevant ministries and commissions of the State Council, Shanghai Municipal Party Committee and Shanghai Municipal People’s Government, the CSRC and its agencies, counterpart units, industry organizations, news media and our partner China Securities Depository & Clearing Corp., Ltd. (CSDC) who have cared about and supported for years the SSE’s reform and development, especially the innovation of stock option.
Stock option, one of the mature derivatives in the international market, is a fundamental risk management instrument. Like insurance in the real economy, it has a special function of risk transfer. We expect that the stock option will be a pioneering product to open up the future development of the market:
-- We expect it to boost market innovation in the future. With it, we could provide investors with diversified choices, support product innovation, and enrich trading strategies.
-- We expect it to increase market efficiency in the future. With it, we could fully reflect market expectation, enhance market pricing efficiency, and promote capital generation.
-- We expect it to improve investor structure in the future. With it, we could help investors get rid of the constraint of linear profit and loss, satisfy the “safe principal and value investing” demand of insurance capital, social security funds, pension funds, and other long-term funds, and improve the market’s capital structure.
-- We expect it to impel the future development of the SSE and the industry. The SSE will build itself into the first exchange providing both spots and futures in China, better bring off its functions of securities pricing, risk management, asset allocation and liquidity center, enhance the depth and attractiveness of its blue-chip market, and contribute to the construction of Shanghai International Financial Center.
As a complicated risk management instrument, stock option is new to Chinese investors who still need time to study and learn. Therefore, at the preliminary stage after the launch of the stock option, the SSE has set up a high threshold for investors and taken strict risk control measures. We won’t expect brisk trading during the initial period after the launch or an immediate demonstration of its functions. Instead, we will base on the long-term strategy to ensure its successful start and steady operation. We believe that with the accumulation of investors’ experience and their improved level in practice, the functions of stock option will definitely be manifested. We hope that investors, industry institutions and the media can fully understand our prudent considerations in the process of promoting innovation.
Thank you again for your presence. Let us embrace the era of option.
Thank you!
Source: Shanghai Stock Exchange