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China mulling mini index futures

By LI XIANG (China Daily)
Updated: 2010-03-05 09:42

BEIJING - China Financial Futures Exchange will introduce mini-sized contracts for stock index futures to rope in more retail investors after the smooth launch of the new financial instrument, Zhu Yuchen, the general manager of the bourse, said on Thursday.

"We will gradually introduce mini-sized index futures to allow more small and medium investors to trade after the new financial tool runs smoothly for some time," Zhu said.

The mini-sized contracts would be modeled on the ChiNext Index which tracks stocks on China's start-up board for small- and medium-sized enterprises and the Banking Sector Index on the main board in Shanghai, Zhu said.

The securities regulator has set a threshold of 500,000 yuan ($73,225) as the minimum deposit required for index futures accounts, something that bars many small investors from trading.

Zhu said the exchange would set an official date for the new financial instrument after getting the regulator's approval. The bourse is currently following the regulatory guidelines for a three-month preparation. The State Council had given the green light for index futures trading on Jan 8.

The exchange is also working on rules for qualified foreign institutional investors (QFII) to trade in index futures. Zhu said the QFIIs would be allowed to use a portion of their investment quota but did not reveal the actual size.

QFII funds at present are granted a total quota of $30 billion after China raised the cap from $10 billion in 2007.