China’s top securities regulator has notified markets that it plans to lift current bans on trading stock-index futures, as investors continue to look for better means of managing risk, Caixin reports.
“A more open economy requires more effective price discovery and risk management,” said Fang Xinghai, vice chair of the China Securities Regulatory Commission (CSRC). This will necessitate a wider range of tools for investors to hedge against risk, he added.
The derivatives use stock indices as the underlying asset, allowing investors to bet on broad price movements in the market to offset other holdings.
Regulators cracked down on index future trading in the wake of the 2015 market crash, blaming them for adding to downward pressure on the market. Restrictions were eased as markets stabilised in 2017, but many market participants have said that progress has been slow and the hedging tools remain largely inaccessible.