Funds and brokers to trade futures soon
By Winny Wang |
May 15, 2010, Saturday
|
Print Edition
Print Edition
CHINA'S fund managers and brokers will soon be allowed to trade the newly launched stock index futures after regulators granted the first batch of hedging quotas, according to sources.
The China Financial Futures Exchange said it had approved the first batch of hedging codes and quotas for stock index futures, which implies institutional investors, including funds and securities firms, will soon be able to trade index futures contracts.
Analysts said the participation of institutional investors will help reduce volatility in the futures market. The futures contracts allow investors to bet on the direction of markets, hedging their positions on stock portfolios.
The CSI 300 Index, which tracks the 300 biggest stocks on the Shanghai and Shenzhen exchanges, has slumped 14.55 percent to 2,868.02 points since April 16 when index futures trading debuted.
The China Securities Regulatory Commission in late April issued rules to accept applications for index futures trading codes from stock brokers and fund companies, allowing them to trade index futures but limiting trade to hedging rather than speculation.
Only individual investors were allowed to trade index futures contracts before the quotas were granted to institutional investors.
Brokerages can apply for the codes to trade index futures via proprietary business and asset management schemes. Fund management companies can apply for the codes to trade index futures via securities investment funds.
The China Financial Futures Exchange said it had approved the first batch of hedging codes and quotas for stock index futures, which implies institutional investors, including funds and securities firms, will soon be able to trade index futures contracts.
Analysts said the participation of institutional investors will help reduce volatility in the futures market. The futures contracts allow investors to bet on the direction of markets, hedging their positions on stock portfolios.
The CSI 300 Index, which tracks the 300 biggest stocks on the Shanghai and Shenzhen exchanges, has slumped 14.55 percent to 2,868.02 points since April 16 when index futures trading debuted.
The China Securities Regulatory Commission in late April issued rules to accept applications for index futures trading codes from stock brokers and fund companies, allowing them to trade index futures but limiting trade to hedging rather than speculation.
Only individual investors were allowed to trade index futures contracts before the quotas were granted to institutional investors.
Brokerages can apply for the codes to trade index futures via proprietary business and asset management schemes. Fund management companies can apply for the codes to trade index futures via securities investment funds.
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