CSRC likely to allow banks to trade bond futures

The mainland’s securities regulator is mulling to allow banks to trade government bond futures to hedge risks under a tightened regulatory environment.

Fang Xinghai, a vice-chairman of the China Securities Regulatory Commission (CSRC) told a forum hosted by the Shanghai Futures Exchange on Thursday that they were actively collaborating with the relevant authorities to push ahead with the move to “satisfy the commercial banks’ needs for better managing risks.”

He did not disclose the time frame for the deregulation, which has been in discussion for more than three years.

Fang’s remarks coincided with the banking regulator’s tightened oversight on lenders’ quality of assets and Beijing’s drive to de-leverage an economy facing increasing financial risks.

The CSRC launched government bond futures at the Shanghai-based China Financial Futures Exchange in September 2013 to help institutions hedge against interest-rate volatility.

But it barred mainland banks and insurers which hold the majority of the country’s treasury bonds, from trading in the market. Only brokerages, mutual funds and cash-rich individuals are allowed to trade bond futures.