The Uncertain State of Futures Trading in China

February 28, 2003 | BY

clpstaff &clp articles

Futures trading in China has had a chequered past. New rules make for a limited opening of the sector, and might constitute a new beginning for China's futures markets, though further legislation is needed to clarify the opportunities for foreign investors.

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Hong Kong

The China Securities Regulatory Commission's (CSRC) issuance of the Issues Relevant to Capital Contributions to Futures Brokerages Circular (关于期货经纪公司接受出资有关问题的通知) (the Circular) repeals a 1996 ban on direct and indirect foreign investment in futures brokerages. The Circular is indicative of two important trends: first, it reflects the continued gradualist approach to the opening of the PRC financial services sector; and second, it shows the increasing importance China's futures markets hold as a tool to hedge against foreseeable risks of business transactions.