China's Shanxi Province Considers Coal Futures Bourse

Source:

"If it's difficult to set up the bourse in Shanxi, we expect to co-operate with other commodity bourses to launch the futures products."

China's largest coal producer, Shanxi Province, plans to establish the nation's first coal and coke futures exchange.

Wang Hua, director at the Shanxi provincial capital market development office, told China Daily, "We have submitted a feasibility study to the authorities with the aim of establishing the market in 2012."

"China is the world's largest coal-producing country, which is in need of a coal-related futures exchange to get more rights on international pricing. If it's difficult to set up the bourse in Shanxi, we expect to co-operate with other commodity bourses to launch the futures products," Wang said.

The Chairman of the China Securities Regulatory Council (CSRC) Shang Fulin said this week that the commission would continue to encourage more futures products in China to help domestic companies hedge against financial risks.

While Shanxi is favored for its proximity to coal-mining companies and its convenient transportation and logistics network, some analysts suggest a coal-producing province may be more disposed to protect local producers, which could impact a fair-pricing mechanism. It has been suggested the coal futures bourse be located in a mature financial center.

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