China unveils 2nd bond futures product
Print Edition
CHINA launched its second bond futures product yesterday to offer diversified risk hedging tools for investors and also to encourage interest rate liberalization.
The 10-year government bond futures that allow investors to trade the first batch of contracts for settlement in September, December and March 2016, were launched on the China Financial Futures Exchange. The 10-year contract for September delivery, the most actively traded of the three contracts available, rose 0.98 percent to close at 97.09 yuan (US$15.7).
“Trading of the 10-year futures will improve risk management in bond markets and diversify arbitrage strategies for institutional investors,” Miyazato Hiroki, vice president of Haitong Securities, said yesterday.
The exchange resumed trading in five-year government bond futures in 2013, ending an 18-year ban on bond futures trading.
China needs bond futures and a diversity of hedging tools for financial institutions to further liberalize deposit and lending rates, analysts said.
Currently only eligible brokerages, mutual funds, private equity and individual investors are allowed to trade bond futures, analysts said, while commercial banks and insurers — who account for above 70 percent of turnover in the spot bond market — are barred from trading them.
Meanwhile, China’s securities regulator said yesterday it has approved the exchange to launch stock-index futures on the SSE 50 Index, a gauge of the top 50 stocks listed in Shanghai, and the CSI 500 Index, which tracks 500 small-cap companies listed on the Shanghai and Shenzhen bourses. Both products will trade on April 16.
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