ON the surface, it seems China's treasury bond futures saga is over. Despite disagreements over prices, which came close to thwarting the Shanghai Securities Exchange's efforts, it did manage to enforce settlements on all outstanding contracts on Monday night - in time to meet a national deadline. The exchanges in Wuhan, Beijing, Zhengzhou, Shenyang and Haikou had fewer problems complying with the China Securities Regulatory Commission directive to settle all contracts before today. Their trading volumes were insignificant compared with Shanghai, which handled about 60 per cent of China's contracts. This naturally made the task of SSE that much more difficult. But, as the SSE has admitted, problems are far from over. A few lingering issues are waiting to be settled. On a national level, the saga has thrown up fundamental questions which top leaders must answer before China lifts its ban on bond futures trading. The first is, does China want a bond futures market? If the answer is yes, how can it ensure the national regulator, exchanges and the market are clear about - and play by - the rules of the game? Beijing's leaders are divided on the need for bond futures, with economic supremo Zhu Rongji reportedly leading the 'no-no' camp. But if China does want to develop a robust spot treasury bond market then a properly-regulated futures market can only help achieve that aim. The problems which triggered the national ban have much to do with the lack of futures law and the lax enforcement of provisional rules - by both the CSRC and the exchanges. Although there has been much talk of a national law, it is taking a long time to be formulated. It will be this time next year before there are proper regulations to govern the industry. Given the recent scandals, work should be speeded up, but formulating the regulations is the easy part. What is more difficult is proper and fair enforcement when the regulations are in place. Many believe the sad state of the bond futures market would not have happened if the exchanges, particularly the SSE, had rigorously implemented their respective rules - as well as the provisional measures announced after the first futures scandal hit China on February 23. Critics are right when they say a national futures law solves only half the industry's problems. Only when it is implemented without fear or favour will China be able to develop a healthy futures market.