Futures Companies To Carry Out Warehouse Receipts Pledge Business Research

Actively led by regulators, futures markets have achieved a great and rapid development, which can be seen in the gradually expanding business scope, the increasingly wider range of traded products, and the steady improvement in market volume. All of these are playing positive roles in the growth of futures market. And it becomes a significant issue for futures companies that how to provide better service for industrial customers in futures market and make a contribution to national economy.Since the crisis, credit-tightening measures and the declining market liquidity have seriously affected enterprises’production operation, especially to numbers of small-and-medium-sized enterprises. It is quite difficult for them to efficiently satisfy credit requirement, so they are in urgent need of new financing channels. On the other hand, for enterprises who hedge operation risk in futures markets, what they are holding is standard warehouse receipts rather than cashes. At maturity, they may meet with failures of physical delivery due to the shortage of floating capital. Therefore, the pledge of standard warehouse receipts seems attractive in demand. The service of standard warehouse receipts pledge have made great progress for years in other countries, and China also have begun its own preliminary explorations. Until now, the service can be classified into two types: Exchange Standard Warehouse Receipts Mode&Commercial Bank Standard Warehouse Receipts Mode. With respective limitations, both of them are not sufficient to meet the financing need of enterprises.As the main participants of futures markets, futures companies are closely connected with industries, familiar with industrial customers, and professional in dealing with standard warehouse receipts. Moreover, the fully understanding and control of risk in futures markets gives futures companies advantages, covering the shortage of standard warehouse receipts pledge service. The large idle funds provide a prerequisite for futures companies to participate in the business of standard warehouse receipts pledge; the futures investment consultancy provides an opportunity to open up the pledge business. Therefore, there must be a great significance for futures companies to take part in the standard warehouse receipts pledge business.Based on analysis, this article will firstly review the previous foreign and domestic findings related with this topic. And the development of standard warehouse receipts pledge business in China will then presented with data. The next chapter will respectively analyze the three different modes of the pledge business and to conclude the limitations. Feasibility research of participation of futures companies in the standard warehouse receipts pledge business will also be conducted with examples in the following part. An investigation will be made from the standpoint of the futures companies involving in the pledge business. The investigation will analyze potential risks and advise on counteractions. Hopefully, this paper could be guide for futures companies in innovation and diversity of service and business.