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China approves index futures, margin trading and short selling
By Winny Wang |
January 8, 2010, Friday
|
Online Edition
Online Edition
CHINA'S central government has approved stock-index futures as well as short selling and margin trading of stocks, a spokesman of the securities regulator said today, in a long-awaited move to help investors hedge risks and boost liquidity.
The securities watchdog will complete the preparation for the launch of index futures in three months, the unidentified spokesman at the China Securities Regulatory Commission told the China News Service today.
The CSRC will also select quality brokers for a trial of short selling and margin trading business before expanding the program, according to the spokesman. The spokesman didn't specify when the trial will begin.
Index futures, often used as hedging tools, allow investors to make bets on the direction of an entire index rather than individual stocks. Margin trading lets investors pay deposits and borrow money from brokers to purchase equities.
In September 2006, China set up its financial futures exchange and has been preparing for the first stock index futures to cover the CSI 300 index that tracks the top 300 Chinese mainland-listed firms.
However, domestic stock market volatility, global financial crisis and worries about possible speculation have delayed the product's debut.
The securities watchdog will complete the preparation for the launch of index futures in three months, the unidentified spokesman at the China Securities Regulatory Commission told the China News Service today.
The CSRC will also select quality brokers for a trial of short selling and margin trading business before expanding the program, according to the spokesman. The spokesman didn't specify when the trial will begin.
Index futures, often used as hedging tools, allow investors to make bets on the direction of an entire index rather than individual stocks. Margin trading lets investors pay deposits and borrow money from brokers to purchase equities.
In September 2006, China set up its financial futures exchange and has been preparing for the first stock index futures to cover the CSI 300 index that tracks the top 300 Chinese mainland-listed firms.
However, domestic stock market volatility, global financial crisis and worries about possible speculation have delayed the product's debut.
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