State-owned enterprises (SOEs) should proceed cautiously in overseas derivatives trading in order to minimize the potential risks, and the government should make efforts to develop the domestic futures market to accommodate these companies' risk hedge needs, regulators and experts said.

The government has become increasingly concerned about the financial derivatives trading by large State-owned enterprises after some of them incurred huge losses.

The State-owned Assets Supervision and Administration Commission (SASAC), which supervises 138 of the country's largest State-owned companies, had earlier ordered companies under its watch to review their derivative products such as futures, options, forwards and swap contracts in overseas markets and stop the ones with high risks.