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New futures attract investor reluctance

By Yu Hongyan (chinadaily.com.cn)
Updated: 2010-02-23 15:51

Investors are in a wait-and-see mood about the newly launched stock index futures, as less than 100 trading accounts were opened yesterday, the first day for account registration, sources told China Business News today.

Analysts say the reluctance in the market comes mainly as a result of the high threshold set for individual investors.

Each individual investor is required to have 500,000 yuan ($73,238.61) as a minimum deposit for an account. But statistics from China Securities Depository and Clearing Co Ltd shows that less than 3 percent, or 1.51 million, of China's A-share individual investors are holding stock trading accounts above 500,000 yuan.

The China Financial Futures Exchange (CFFEX), the authorized body overseeing the new trading mechanism, also set other requirements for qualified investors.

Eligible investors are required either to have conducted mock trading in index futures for at least 10 trading days along with at least 20 transactions, or they must have conducted at least 10 transactions in commodities futures markets over the past three years. Moreover, they have to pass an exam on basic knowledge of stock trading, and an overall assessment from a futures brokerage company.

As for institutional investors, there are still no clear rules to guide their trading of stock index futures.

CFFEX has enrolled 124 futures brokerage companies as its membership, but less than half of them become qualified to conduct stock index futures transaction at present, which could also lead to the cold response in the market, an analyst told the newspaper.

CFFEX did not release the exact number of accounts openings yesterday.

Trading of stock index futures is likely to start March 22, Beijing Business Today reported today.