Index futures to trade April 16
By Winny Wang |
March 27, 2010, Saturday
|
Print Edition
Print Edition
THE China Financial Futures Exchange will launch the Chinese mainland's first stock index futures contract on April 16 in Shanghai to help investors hedge against risks.
The exchange yesterday said the China Securities Regulatory Commission has approved the futures contract, which will be based on the CSI 300 index that tracks the top 300 mainland-listed companies.
The first contracts to trade will be for May, June, September and December. The margin for May and June contracts will be 15 percent, while the margin for September and December contracts will be 18 percent, the exchange said.
"The higher margin is to secure a stable start for the index futures and prevents speculative investment that may be forced to close positions if the margins are not sufficient," said Lin Feng, an analyst at Aerospace Securities Co.
The daily cap for May and June contracts will be 10 percent based on the benchmark price. For September and December contracts, the cap will be 20 percent, the exchange said.
Investors must have a minimum 500,000 yuan (US$73,000) to open an account.
Index futures are agreements to buy or sell an index at a preset value on an agreed date. Often used as hedging tools, they allow an investor to make bets on the direction of an entire index rather than individual stocks.
"The news has already been factored in, as the exchange manager said earlier this month that the index futures will be launched in middle April. Investors should have adjusted their holdings, so the market won't be greatly influenced by the news," said Chen Gang, an analyst at Southwest Securities Co.
However, the futures product may also lead to speculative trading and require sophistication on the part of investors, analysts said.
"The product is suitable for institutional investors rather than individual investors to hedge risks and secure the stability of their assets," Lin said.
More than 2,500 investors opened accounts to trade index futures in the month following February 22, the first day that investors were allowed to open accounts. Most of the investors have more than 10 years of experience in stock trading.
China established the financial futures exchange in 2006 in preparation for the debut of index futures. But worries about speculation and global financial turmoil delayed its launch several times.
The exchange yesterday said the China Securities Regulatory Commission has approved the futures contract, which will be based on the CSI 300 index that tracks the top 300 mainland-listed companies.
The first contracts to trade will be for May, June, September and December. The margin for May and June contracts will be 15 percent, while the margin for September and December contracts will be 18 percent, the exchange said.
"The higher margin is to secure a stable start for the index futures and prevents speculative investment that may be forced to close positions if the margins are not sufficient," said Lin Feng, an analyst at Aerospace Securities Co.
The daily cap for May and June contracts will be 10 percent based on the benchmark price. For September and December contracts, the cap will be 20 percent, the exchange said.
Investors must have a minimum 500,000 yuan (US$73,000) to open an account.
Index futures are agreements to buy or sell an index at a preset value on an agreed date. Often used as hedging tools, they allow an investor to make bets on the direction of an entire index rather than individual stocks.
"The news has already been factored in, as the exchange manager said earlier this month that the index futures will be launched in middle April. Investors should have adjusted their holdings, so the market won't be greatly influenced by the news," said Chen Gang, an analyst at Southwest Securities Co.
However, the futures product may also lead to speculative trading and require sophistication on the part of investors, analysts said.
"The product is suitable for institutional investors rather than individual investors to hedge risks and secure the stability of their assets," Lin said.
More than 2,500 investors opened accounts to trade index futures in the month following February 22, the first day that investors were allowed to open accounts. Most of the investors have more than 10 years of experience in stock trading.
China established the financial futures exchange in 2006 in preparation for the debut of index futures. But worries about speculation and global financial turmoil delayed its launch several times.
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