China creates its own oil futures

CHINA will soon be able to trade oil using its own currency by creating a futures market to rival the international benchmark contracts, which are traded exclusively in dollars.

The China Securities Regulatory Commission yesterday confirmed its plans to begin the trade of yuan-based oil futures on the Shanghai Futures Exchange from March 26.

China is now the world’s largest crude importer, which is understood to be a large part of its drive to establish a benchmark that reflects its local market and offers its mega refineries more clout.

China’s long-held appetite for its own crude futures market is highly controversial, in large part because it upends a raft of legacy precedents in the market, which has always relied on benchmarks based on futures contracts traded for Brent crude or the West-texas Intermediate.