The China Financial Futures Exchange has amended its draft trading rules for
the country's first stock index futures, which are expected to be launched this
year, to reduce potential risks.
Analysts said the amendments, published on Tuesday,
reflected concerns about a possible overheating of China's stock market, with
the Shanghai benchmark index more than tripling in value since the start of last
year. The index climbed nearly 3 percent on Tuesday.
The exchange has not given a time frame for the start of index futures
trading, but industry sources have said it may be later than the first-half
launch indicated by regulators, partly because the exchange was still working on
its trading system.
The exchange, which will trade futures based on an existing index of the 300
largest firms by market capitalisation on the Shanghai and Shenzhen stock
exchanges, raised its minimum margin requirement to 10 percent from 8 percent in
draft rules published in the China Securities Journal on Tuesday.
The draft, which supersedes a proposed set of rules released late last year,
also lowered the cap on investors' holdings to 600 lots from 2,000 lots.
"The adjustments mean the exchange wants to raise the threshold to avoid
risks, as the Chinese stock market may recently have become overheated," said
analyst Cai Luoyi at China International Futures.
"It can lower the barrier again to fit any new situation. Exchanges have the
flexibility to change the trading rules," he said.
China is eager to develop its capital markets by launching domestic stock
index futures, but investors are concerned that the start of futures trading
could undermine the recent Chinese bull market by allowing short-selling of
"The exchange is gradually preparing the launch of the new futures," said Hui
Mei, a spokeswoman for the exchange, although she declined to comment on the
time frame for the kick-off of trading.