Company Profile

Luzheng Capital Management Co., Ltd. (hereinafter referred to as "Luzheng Capital") is a subsidiary that is wholly-owned by Luzheng Futures Co., Ltd. (Stock Exchange code: 01461.HK) and is mainly engaged in risk management services. It is one of the first batches of risk management companies filed with the China Futures Association, whose a registered capital of 750 million yuan, wholly-owned holding Zhongtai Huirong (Hong Kong) Co., Ltd., and participating in the establishment of Rizhao Commodity Trading Center Co., Ltd. and Shanghai Lu Zhengfeng Tong Economic and Trade Co., Ltd. Up to now, Luzheng Capital’s business filed with the China Futures Association mainly includes OTC derivatives business, market-making business, basis trading, warehouse receipt services, cooperative hedging, etc.. It continues to be committed to becoming a commodity futures and derivatives Market-leading integrated financial service provider.
Luzheng Capital has established a high-quality talent team with rich experience in the futures, spot and overseas derivatives markets. The over-the-counter business team members have all reached a master's degree or above in international or domestic prestigious universities, and have long-term experience in internationally renowned investment banks, structured product design and practical experience in private equity. They can use advanced financial engineering tools and quantitative methods to assist customers in completing product design and risk management services that meet customer needs.
Luzheng Capital is one of the first On-market derivatives market makers of Dalian Commodity Exchange, Zhengzhou Commodity Exchange and Shanghai Futures Exchange. It also provides market-making services for more than 20 futures and options products to achieve long-term stable and effective quotation services. Luzheng Capital plays a positive role in the liquidity of futures and options markets.
Luzheng Capital advances its risk management capabilities through basis trading, warehouse receipt services and other business forms. Luzheng Capital also improves the efficiency of corporate inventory circulation, provides upstream and downstream customers with various forms of risk management services, and solves corporate short-term funding difficulties, and stabilizes corporate production Operating.
In the process of operation, Luzheng Capital combines research and practice to provide supply chain financial services to manufacturers, traders, and consumers in different industries, as well as professional services such as commodity price risk management and inventory value management. At the same time, it uses the Hong Kong subsidiary Zhongtai Huirong (Hong Kong) Co., Ltd. platform helps domestic entities to use domestic and foreign futures, options, swaps and other on- and off-market derivatives to improve their pricing mechanism, hedge business risks, and achieve global allocation of resources. Luzheng Capital is going to focus on improving the risk management capabilities and market competitiveness of enterprises, and promoting the sustained and stable operation of domestic entities. And as a result, it will contribute their strength to the steady and orderly development of the real economy.

Business Types

Luzheng Capital's filing business includes over-the-counter derivatives business, market-making business, basis trading, warehouse receipt services, and cooperative hedging. Luzheng Capital provides price risk management, inventory management and supply chain finance services to manufacturers, traders, and consumers in different industries through futures, options and other derivative instruments. At the same time, Luzheng Capital actively explores and implements new business forms in the course of business development, continuously innovates risk management models, improves risk management levels, and effectively guarantees the steady operation of entities.
i.OTC derivatives business
Luzheng Capital’s over-the-counter derivatives business includes basic options and their simple combinations, exotic options, structured products and customized risk management solutions for enterprises. Customized risk management solutions include trading with option, "insurance + futures", etc. In 2020, Luzheng Capital’s over-the-counter derivatives business will continue to maintain a strong momentum, reaching more than 8,000 transactions with corporate clients. The “Insurance + Futures” project covers approximately 900,000 acres of agricultural products, and innovatively practiced the trading with option and spot index swap transactions, etc.
ii.Market making business
Luzheng Capital’s market-making business has established a professional team composed of trading, research, and technical personnel, and has accumulated rich experience in quantitative trading and research in futures and options. Luzheng Capital is one of the first On-market derivatives market makers of Dalian Commodity Exchange, Zhengzhou Commodity Exchange and Shanghai Futures Exchange. It also provides market-making services for more than 20 futures and options products.
The market-making business team of Luzheng Capital continues to provide quotation services to the market through professional market-making strategies and efficient trading systems. At the same time, they corrects market prices through a large number of transactions. This will play a positive role in promoting the liquidity of the futures and options market, and will help investors manage risks by using on-market futures and options.
iii.Basis trading business
Basis trading, as the basic business of a risk management company, is the most direct means for Luzheng Capital to penetrate the real industry chain. On the one hand, basis trade uses the advantages of Luzheng’s capital’s information and talents to obtain normal trade flows and profits. On the other hand, basis trade brings changes in business and trade methods to the real industry chain, and effectively improves the risk management awareness and level of enterprises. In recent years, Luzheng Capital's basis trading business has developed rapidly, with continuous growth and innovation in trade volume and trade models. In 2020, based on the original ferrous metals, oils, and grain business units, Luzheng Capital added cotton, non-ferrous metals and fresh products business department.
iv.Warehouse Receipt Service Business
The warehouse receipt service business is to form warehouse receipts, bills of lading and other delivery certificates or cargo rights certificates for the physical commodities stored in warehousing and logistics enterprises, through various business forms such as warehouse receipt swap, warehouse receipt pledge, and agreed repurchase, so as to provide customers Business that provides services such as inventory management.
As the receipt of bulk commodities and the certificate of cargo rights, warehouse receipts have strong financial attributes. The liquidity of warehouse receipts is very high. Warehouse receipts, especially futures standard warrants, are important trading targets for commodity transactions. In addition to the traditional warehouse receipt financing business, it can also become an important target for basis trading. Compared with non-standard warehouse receipts, the basis trade of the standard warehouse can realize online circulation, which can reduce transaction costs and reduce transaction risks.
Luzheng Capital's warehouse receipt service business, in addition to standard warehouse receipt related businesses, gives full play to its own advantages in risk management, penetrates into the commodity spot industry chain, and replicates its own risk management service capabilities to the upstream and downstream of the commodity spot industry chain Enterprises, to improve the price risk management capabilities and inventory management of physical enterprises, and stabilize the production and operation of physical enterprises.