CHINA'S National Futures Exchange Association (NFEA) is bowing to official pressure to slash the number of broker members allowed to trade on behalf of clients and will publish their names in about a fortnight. After the International Futures and Options Exchange Conference in Hong Kong yesterday, chairman Qiao Gang said the NFEA was confident of meeting the deadline of mid-December set by the China Securities Regulatory Commission (CSRC) to halve the 3,000 membership of commodity exchanges allowed to open client accounts. 'We are confident of coming up with the list required by the government,' he said. There has been widespread suspicion about how the NFEA, a self-regulatory organisation set up by the 15 authorised exchanges in September last year, would reach a consensus in culling its membership. While members who fail to make the list can remain in proprietary trading, it is still unknown how many brokerages will be granted the licences for client trading as they usually have memberships in more than one exchange. The CSRC has left the difficult task of recommending eligible members to the exchanges. By halving the number of members authorised to trade on behalf of clients, the CSRC hopes to put a brake on overheated futures speculation as brokerages engaged in proprietary trading on their own behalf have to bear losses themselves rather than pass them on to the client. The CSRC announced a series of measures in October after heavy speculation in plywood futures in Shanghai and rice futures in Guangzhou. Measures included imposing ceilings on open interest and raising the margin requirements. In an address to the two-day conference in Hong Kong, Mr Qiao said there were still too many exchanges in China even after the number had been reduced from more than 50 to 15. 'As the market capacity at present is limited, the volume on each exchange is also limited. The functions that an exchange should have, such as collecting information and pricing, are therefore restricted,' he said. Mr Qiao said the number of exchanges needed in China should be decided by the CSRC. Mr Qiao also admitted that China would complete the first phase of its futures market development only by the end of this century. This phase, which started in 1990, is to carry out pilot programmes and lay down a regulatory framework, he said. Phase two, taking another five to 10 years, would focus on perfecting the development of its regulatory framework, Mr Qiao said, and only by this stage would foreign investors be allowed in. Mr Qiao, who is also the chairman of the Beijing Commodity Exchange, said that exchanges in China faced too much administrative interference as almost all powerful members were state enterprises. 'A lot of market players recognise only profits but not losses. They always complain in different ways and hope the government will intervene [to write off the loss],' he said. Mr Qiao said lack of an independent clearing house was another headache as exchanges had to bear all the risks themselves.