Plan may open govt bond futures to lenders: CSJ

By Yu Xi in Shanghai Source:Global Times Published: 2013-8-12 22:18:01

Chinese financial authorities have submitted a plan which may allow the country's commercial banks to participate in the trading of government bond futures either directly or through futures brokerages, the China Securities Journal (CSJ) reported Monday.

No additional details were provided concerning the plan or its possible implementation.

The official newspaper went on to report that, Li Qian, head of Industrial and Commercial Bank of China's yuan transaction division, stated over the weekend at a government bond futures forum that regulators will likely select a handful of banks to engage in pilot trading of these derivatives before any real deals get underway.

Wang Wei, deputy leader of the China Financial Futures Exchange (CFFEX) team managing the relaunch of government bond futures, was also cited by the CSJ as saying that detailed trading guidelines could be released soon.

"Government bond futures will give retail banks a tool to hedge against interest rate volatility, and continue lending, as the government continues to introduce market-oriented rate reforms," Liu Wenbo, a bond futures analyst from Shanghai Cifco Futures, told the Global Times Monday.

The CFFEX began soliciting public comment on rules to support government bond futures trading just days after the China Securities Regulatory Commission (CSRC) announced on July 4 that these derivatives would be reintroduced after an 18-year hiatus.

Chinese financial authorities approved the launch of stock index futures linked to the CSI 300 equity benchmark in April 2010. These contracts were the first financial derivative available to investors on the Chinese mainland after a high-profile trading scandal led to the banning of government bond futures back in 1995.

Under the terms of a draft issued by the CSRC last month, securities brokerages and mutual funds will only be allowed to trade five-year government bond futures once official trading begins. An official relaunch data has yet to be set.

The Shanghai Securities News also reported in July that the China Insurance Regulatory Commission is expected to allow insurers to participate in government bond futures trading.

Posted in: Markets

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