Stock index futures trading volume down 99% from June peak

Trading volumes for China’s CSI 300 and CSI 500 indexes hit record lows on Tuesday, having fallen 99% from their June highs as liquidity in China’s stock markets dried up amid higher margin requirements and tightened position limits, Bloomberg reported. A government crackdown targeting wagers against stock prices rising and short-term trading –  both of which run through the futures market in China – appears to be a major cause of the drop, but futures can give investors a tool to hedge against risk, and a sustained slump in liquidity may ultimately spur some institutional investors to “give up hedging in futures, unwind futures positions and reduce their stock positions,” said Dai Shenshen, a trader at SWS Futures.