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China may ease curbs on stock index futures trading to foreign capital

2019-04-15 16:16

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BEIJING, April 15 (Xinhua) -- China is likely to roll back curbs on stock index futures trading and open the market to overseas investors, Securities Daily reported.

Qualified foreign institutional investors(QFII) and Renminbi qualified foreign institutional investors (RQFII) will be allowed to participate in the Chinese futures market, along with domestic social security funds, commercial banks, insurance funds, and state-owned companies, Securities Daily quoted regulator sources as saying.

This is a second signal of looser restrictions on stock index futures trading this year since Fang Xinghai, vice chairman of China Securities Regulatory Commission (CSRC) said in March that measures to open up the Chinese stock index futures market were under study and would come out this year.

China's opening-up of stock index futures trading will further help institutional investors hedge against risks, according to Li Yansen, a researcher specialized in stock index futures of Founder CIFCO Futures Co., Ltd.

Li's idea was echoed by Jiang Xianhui, a stock index futures researcher of Huishang Futures, who also said that relaxing restrictions will better facilitate futures to serve real economy.

As China continues to open up its capital market, foreign investment in China's stock index futures will become a trend, playing a positive role in driving market liquidity and improving the mix of investors, industry insiders told Securities Daily.

Meanwhile, with the participation of overseas investors, the categories of domestic stock index futures will be optimized.

For example, foreign investors demand hedging tools when they buy Chinese shares after the inclusion of A-shares in MSCI indexes, making it more necessary to develop a wider range of MSCI-backed stock index futures.

In the long run, foreign investment in China's stock index futures will also boost exchanges between domestic and foreign institutions, speed up institutionalization process of domestic investment which is expected to benefit the long-term development of China's equity market.

China put restrictions on stock index futures trading in 2015 to curb speculation and stabilize the market following a stock market plunge that year.
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