China says stock futures trading to begin April 16, part of move to develop securities market

China says stock futures trading to begin April 16

SHANGHAI — China will launch trading of stock futures on April 16, regulators said Friday, in a move that could help boost stock prices and increase the role of China’s securities markets in financing economic development.

The beginning of trading has long been anticipated by stock traders eager for new investment options.

The notice posted Friday on the Web site of the China Securities Regulatory Commission notifies the China Financial Futures Exchange, based in Shanghai, of its approval to begin trading stock futures trading on the Shanghai and Shenzhen stock exchanges.

The benchmark Shanghai-Shenzhen 300 Stock Index must be launched strictly according to regulations, to “effectively prevent market manipulation,” the notice says.

China announced earlier this year that was launching trial margin trading and planned to begin stock futures trading soon.

Regulators previously were reluctant to allow stock futures and margin trading on China’s two stock exchanges in Shanghai and the southern city of Shenzhen, seeing them as too risky for investors and a possible source of volatility.

The government has pushed ahead with efforts to make its securities markets, which are mostly limited to domestic investors, more efficient and attractive despite the global financial crisis.

The markets are still dominated by state-owned companies but Beijing is making it easier for private companies to use them to raise money.

The government also has created a third exchange meant to nurture small and high-tech enterprises, modeled on the U.S.-based Nasdaq market. It began trading in October in Shenzhen with 28 companies listed.

According to a notice on the Web site of the China Financial Futures Exchange, the first contracts to trade will be for May, June, September and December. Investors must pay cash deposits equivalent to 15 percent of the contract value for May and June contracts, and 18 percent deposits for the longer-term contracts.

The contracts are meant to let investors bet on future gains and declines in the market by buying the index at a stipulated value on a particular date.

The exchange began accepting applications for accounts in February. Investors are required to have a minimum of 500,000 yuan ($73,200) in their stock index futures account. Settlements will be on the third Friday of each month when the contracts are due to expire.

On the Net:

China Securities Regulatory Commission: www.csrc.gov.cn