China unveils guidelines to boost futures market growth - Breaking The News China's State Council announced on Friday in a document guidelines that would help boost oversight, minimize risks, and enhance "high-quality" growth in the futures market. According to the document, China's Securities Regulatory Commission (CSRC) advised banks to "enhance credit management and stop firms from illegally using loans for commodity futures speculation." Beijing further plans to take serious action against those using "illegal and irregular" practices in the futures market. The CSRC is also currently looking into potentially opening stock index futures, as well as government bond futures to foreign investors.
dude, margin loan is legit use, shorting futures is a good practice. no winder the chinese are so fucked. when you open a casino, you have to let all the players come.
as CSRC said " illegally using loans" e.g, some people just told banks they need those money to buy a house, but actually used it to trade futures and lost all banks don't like such idea
folks do that all the time, home equity line of credit. if a trader lost it all, he/she lost the house, so be it.
that's someone who is fully committed to trading as a "job", not playing a game. futures market is generally a serious pursuit.
China considering further open up stock index and bond futures to foreign investors -What China really needs to allow for is Short trading without undue punishments and interference. You can have reasonable measures to ensure a healthy and fair market but you shouldn't punish short traders just because... -And NO capital control and restrictions on foreign investors when they try to withdraw money Free market is what foreign investors want because this is what they get in their own market back home. If they are able to trade freely back home making money longing and shorting the market, why would they consider putting their money into a market when they will receive punishment for basic trading actions and not even able to get money out when they want to? If China 1) allows shorting without undue punishments and interference and 2)imposes no capital control in any form on foreign investors when they want to take their profit out of China then China would have no shortage of foreign investors, guaranteed. If not, no matter how much China opens up the market, no foreign investors would come. NOBODY wants to invest in a market that they can't make money in. You want people to come in to invest, you have to let them have profit and be able to enjoy their profit in their own country.
This is what traders choose to do to get more capital, sadly, to put their house into it when in reality, brokers in the West are not allowed to go after a trader's house if they don't lose and don't meet their margin requirements. There have been real cases of that. That's why margin for trading is considered an unsecured loan and that's why brokers have so high of margin requirements.
for capital flow, I think China's doing more to enable cross border capital flow these days China relaxes capital controls to entice badly needed foreign investment | CNN Business
Yes that is a welcoming sign but the problem is the consistency and transparency in its implementation and execution. Very often, the policy is one thing but when it comes to implementing and executing it, it's another. Everything is fine until when there is a "problem" and you never know where the "problem" is. All you know is whatever is stated in the policy no longer applies. And plus policies in China as in many countries with similar political system/structure can change in a flash. Today, the capital control is relaxed and everything is great. You put your money in thinking this is a new policy and new investment environment and then all of sudden, the policy changes and your money is locked in. And you have no recourse. These are the biggest reasons why foreign investors are not as enthusiastic as before in investing in China imo.