China's derivatives market is projected to usher in a big round of offerings this year as the country's policymakers seek to promote high-quality growth, entice foreign investments and attract more long-term institutional capital.
The futures market became the first field in the Chinese financial industry where foreign firms could have full control over their business entities as the country lifted on Jan 1. ownership restrictions on futures firms.
An official at the China Securities Regulatory Commission said the regulator is keen to give more market access to foreign investors in the hope of consolidating and energizing the sector, which is less established than the securities and fund industries of the country.
It is expected that the regulator will soon issue a revised policy on eligible foreign institutional investors, which will significantly broaden their investment reach and allow them to trade in the derivatives market including futures and options for financial and commodity.
Also, this year will be made available to overseas investors more forms of commodity futures and options contracts. The Shanghai Futures Exchange will start this year's trading in futures contracts for low-sulfur bunker fuel oil and container freight index futures contracts, which will allow foreign investors to participate in the trade.
The efforts underlined China's aim to improve its pricing power on the international commodity markets as the country has been a major importer of raw materials and commodities but has had limited influence on prices on the international markets.
Future market liberalization will also help raise the Chinese currency's global profile as the renminbi or yuan denominates commodity futures contracts and options contracts that are available to global investors.
The opening of the futures market is in line with the growth of China's international trade. It is also a required way to boost the Chinese futures market's international pricing efficiency, Fang Xinghai, CSRC's vice-president, said at a recent forum on derivatives.
According to Fang, this year the securities regulator will continue to expand the derivatives market by authorizing and offering investors more products at home and abroad.
Two new options, the gold option and the CSI 300 stock index option, debuted on the market and more are in the pipeline in December as the regulator seeks to strengthen the roles of the country's commodity and financial derivatives markets to provide more opportunities for companies and investors to manage risks in a slowing economy.
