Chinese government bond futures start trading again after 18-year hiatus
Bond futures could help the mainland liberalise its interest-rate mechanism and provide a new tool for institutions to hedge against interest-rate volatility.
Mainland government bond futures started trading in Shanghai yesterday, marking the end of an 18-year hiatus, as the securities regulator said it would be firm in controlling risks in the nation's fledgling financial markets.
Bond futures could help the mainland liberalise its interest-rate mechanism and provide a new tool for institutions to hedge against interest-rate volatility. Banks and insurers, which hold 70 per cent of the mainland's government bonds, have been barred from playing the new derivatives listed on the China Financial Futures Exchange.
Only brokerages, mutual funds and cash-rich individuals are allowed to trade bond futures. A total 36,500 lots changed hands yesterday, falling short of analysts' expectations.
During earlier simulated trading, daily turnover of bond futures stood at about 47,000 lots. One lot is one million yuan.
"It was a smooth start," said Jiang Mingde, economist at Sinolink Futures. "This was what the regulators expected to see."
Beijing banned treasury bond futures in 1995, after a trading scandal caused the collapse of Wanguo Securities.
