Stock index futures trading nears launch as brokers win approval
Beijing has approved the first batch of brokerages to trade stock index futures, signalling that trading on the Shanghai futures exchange will begin within a few months.
Beijing-based Yinjian Futures confirmed yesterday the China Securities Regulatory Commission had approved its application to trade financial futures, while the China Business News reported that Shanghai-based Jiuheng Futures Brokerage had also won a licence.
'We cannot be sure when we will start trading futures. It is unlikely that it will happen within the next two months, but it is possible we will start business in September or October,' said Zhang Dajiang, an analyst at Yinjian Futures.
Although the CSRC and the Shanghai futures exchange have yet to give a firm date for the long-delayed introduction of stock index futures trading, the vice-director of the CSRC's futures department said in June that trading would begin this year.
Mr Zhang said the exact timing depended on the speed with which the regulator approved applications filed by other brokerages and addressed concerns about computer software and investor education.
Fears that inexperienced speculators would swamp the futures exchange were a key factor in Beijing's decision to delay the start of futures trading, which was originally expected to begin at the start of this year.
The introduction of financial futures trading, a crucial step towards developing a more sophisticated equities market, is eagerly awaited by institutional investors which will finally be able to hedge against falling stock prices by short-selling.
Yinjian Futures is a subsidiary of Yinjian Group, best known for running one of Beijing's largest taxi companies, and a member of the commodities futures exchanges in Shanghai, Dalian and Zhengzhou.
The company has registered funds of 50 million yuan, according to its website. Brokerages must have 45 million yuan of registered capital to be approved for futures trading.
Jiuheng Futures, which is 90 per cent owned by Shanghai-based financial services provider Jiulian Group, was unavailable for comment yesterday.