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State Council calls for working proposals

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Beijing has told the Shanghai Stock Exchange to look at reintroducing financial derivatives on China's stock markets, according to a senior exchange official.

The move would reverse a decision six years ago by Beijing to stop futures trading in the wake of a financial scandal.

China is set to introduce listed warrants or call options that would trade on the secondary market within the next six months, said James Liu, executive vice-president of the Shanghai Stock Exchange at the 2001 Derivatives Expo conference in Hong Kong yesterday.

Warrants or call options are securities that give an investor an option on the right to buy a stock, bond or other instrument at a specific price within a certain time period.

The lifetime of a warrant is often measured in years while the lifespan of a call option is months.

'The reason we want to do this is because one of the problems is that there are a tremendous amount of state-owned shares,' Mr Liu said.

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