Date
13 December 2017
A recovering stock market is said to be prompting Chinese authorities to consider easing up on stock-index futures trading, Photo; Bloomberg
A recovering stock market is said to be prompting Chinese authorities to consider easing up on stock-index futures trading, Photo; Bloomberg

China may ease curbs on stock-index futures: report

China may ease curbs on trading in stock-index futures after clamping down on the financial product earlier following a stock-market crash in the summer of 2015, according to the Wall Street Journal.

The measures being considered include halving the amount of deposits that an investor must put down when investing in index futures and doubling the maximum limit on daily trading volume of a single contract, the report said, citing people familiar with the matter.

The moves will be incremental and largely symbolic, and are mostly aimed at sending a signal that Beijing is getting comfortable with a recovering stock market, sources were quoted as saying.

While the curbs on index futures likely contributed to a stabilization of the stock market in the past year, investors feel they have lost a key tool for hedging against downside risks.

The new deliberations come after two of China’s top securities regulators made a high-profile visit to the China Financial Futures Exchange just before Christmas, the report said.

Liu Shiyu, chairman of the China Securities Regulatory Commission, and one of his deputies, Fang Xinghai, paid a visit to the exchange on Dec. 23 on a trip described by state media as for “research and inspection”.

Stock-index futures, which were launched by Beijing in 2010, were suspected by the authorities of intensifying a brutal selloff in 2015 that wiped out nearly 45 percent of the Chinese stock market’s value in a little over two months.

Authorities have since imposed tight restrictions on trading in index futures, including raising the size of the required deposit on a contract’s value to 40 percent from 10 percent and capping daily trading in a single futures product to just 10 lots per investor.

The measures being considered include cutting the required deposit to 20 percent as well as raising the daily trading volume cap to 20 lots, sources told the Journal.

The relaxation of the curbs could happen fairly soon, the report suggests.

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RC

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