1970-01-01 08:33:27
The China Securities Regulatory Commission (CSRC) is poised to allow trading in the mainland's first equity-based derivatives - likely to be stock index futures contracts based on the Shanghai-Shenzhen 300 Index as early as next month.
The move was expected after the investor watchdog issued licences this month to more than 40 brokerages to trade on the China Financial Futures Exchange, established in Shanghai in September last year.
The licences come in the wake of the release by the CSRC in June of the final version of rules governing futures trading, and are a clear signal that stock futures will soon be traded, brokers said.
A report in the Economic Observer yesterday said qualified foreign institutional investors will be allowed to trade the stock-index futures with a total amount of about US$1 billion.
QFIIs can open three accounts to buy and sell stock-index futures for themselves and their clients through mainland futures brokers, the report said, citing an unpublished government decision made last week.
The quota will add to the existing quota of QFII stock investments, it said. Beijing has given US$10 billion in quotas to foreign investors, with a promise to triple the number.
On Saturday, the State Council said conditions for the introduction of stock index futures in the mainland were "already in place", but did not give a timetable for the start of trading in a statement posted on its website. The statement also said the CSRC would continue to promote the listing of "big, good-quality" companies and accelerate the development of the corporate bond and asset-backed securities markets.
Industry players said index futures are expected to arrive some time in September. The regulator is expected to issue further licences for more companies to trade on the Shanghai-based China Financial Futures Exchange, the China Securities Journal reported last Wednesday.
Index futures contracts will likely debut after more than 100 licences are granted, industry insiders said.
"Preparatory work is proceeding at a fast pace," said Topwin Futures Brokerage deputy general manager Liu Zhongyuan. "It seems quite likely that the contract will be launched within the year."
Mr Liu said he expected all paperwork to be completed next month, after which contracts would begin trading.
Index futures were scheduled to be launched earlier this year as a way to contain the risk of extreme volatility on the stock exchange. But the government called off the launch, citing regulation and billing problems.
In June, the regulator published rules governing index futures to pave the way for the launch of the derivative product.
"It all comes down to the regulator's attitude towards index futures, now that the market is technically prepared," said Guodu Securities analyst Bian Fengwei.
Brokers said the trading system was now in place and could be made operational at any time.
"We hope trading will begin as soon as possible," said Li Lijun, an official at Shanghai Jinpeng Futures. "We can start today. Everything is ready to go."
Some brokers speculated short-selling would dominate the index futures market because stock prices have continued to scale new heights, raising concerns of overheating.
But others dismissed these concerns, saying the strength of the country's blue chips and swelling market capitalisation would make it difficult for speculators to manipulate the market. [South China Morning Post]
Source:CE.cn