China Said to Plan to Introduce Index Futures as Early as March

Jan. 4 (Bloomberg) -- China’s securities regulator may introduce futures contracts on the country’s stock indexes as early as March, an official with knowledge of the matter said.

The State Council, China’s cabinet, has given the China Securities Regulatory Commission approval “in principle” to introduce index futures, said the person, who declined to be identified before an announcement. The first contract, based on China’s CSI 300 Index, may begin trading after the Communist party’s annual congress in March, the official said.

Index futures would give investors in China a mechanism to profit from declines in prices for the first time, allowing them to hedge risks. That may help ease fluctuations in a market in which the stock benchmark almost doubled in 2007, slumped 65 percent in 2008 and rebounded 80 percent last year.

“For institutional investors, having stock index futures is important,” said Tony Wu, Shanghai-based portfolio manager at Martin Currie Investment Management, which oversees $4 billion in Greater China. “There will be some tools we can use to hedge risks.”

Stock index futures are agreements to buy or sell an index at a preset value on an agreed date. CSRC Chairman Shang Fulin said in 2007 that the infrastructure needed for such products, including regulations, are in place. An official at the regulator’s press office declined to comment.

The CSRC “will actively and steadily push forward the innovations of securities and futures based on the actual needs of the market,” Shang said in a Dec. 18 speech. “We will introduce margin trading and index futures at an appropriate time.”

Limited Options

Index futures are part of China’s push to make more investment options available in a nation with 25.3 trillion yuan ($3.7 trillion) in household savings. The limited scope of securities to trade has contributed to boom-and-bust cycles in China’s stock and property markets.

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connected to Globex... hahahaha

 

A sense of joy and expectation permeates the headquarters at GS, MS, Citadel et al.

 

While at the same time a sense of fear and cries permeates the headquarters at CME, Eurex, Ice et al.