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CFFE to ease in futures trading

By Jin Jing (China Daily)
Updated: 2006-10-28 09:38

In a warm-up for the upcoming launch of index futures trading, China Financial Futures Exchange (CFFE) will hold index futures simulation trading on Monday.

"We will begin trading in the index futures at the beginning of next year," said CFFE General Manager Zhu Yuchen. "The launch date is to be determined by the stock market performance."

For now, every futures company, security company, fund management company, insurance assets management company and commercial bank can apply to become a simulation member through CFFE. Individual investors can buy index futures through qualified institutional investors.

Over 80 institutional investors have been admitted into the simulation trading so far. The futures company will get 500 million yuan (US$63.3 million), while other companies get 100 million yuan (US$12.7 million) as simulation settlement cash reserves. Different amounts of money may be allocated to individual investors.

As in the real thing, the simulation will trade on contracts based on the Shanghai Shenzhen 300 Index. The SHSE-SZSE index is the only one trading both the Shanghai and Shenzhen stock exchanges. The contract multiply is 300 yuan (US$38) per point, while the minimum changing price is 0.1 point.

Every investor should pay 8 per cent of contract value as the trading deposit. The trading code is IF, for index futures.

The CFFE will carry out the ranking membership policy in future index trading. At the top of the hierarchy is CFFE, under it are futures companies, commercial banks and their subsidiaries, as well as other institutional investors. Individual investors are at the bottom.