China Mulling Resumption of T-bond Futures
China Financial Futures Exchange (CFFEX) is mulling resumption of treasury bond futures trading, but a timetable has not been set, Zhu Yuchen, general manager of the CFFEX, told Xinhua.
The CFFEX has completed the initial design of the futures contracts tracking a four-to-seven-year medium-term bond, Zhu said on the sidelines of the country’s annual parliamentary session.
The bourse has finished the design of trading rules, including systematic risk prevention, according to Zhu. CFFEX is currently seeking opinions on the new system and some institutions have been invited to participate in test trading.
China suspended T-bond futures trading in 1995 over a scandal of illegal and excessive speculation related to the trading of a three-year-term T-bond coded “327.”
“We are fully confident about resuming T-bond futures trading at the moment… We have prepared a number of plans to combat emergencies, market manipulation, technical challenges and cross-market risks,” said Zhu.
Zhu noted that China’s market environment and regulatory capability is far better than it was 17 years ago, and conditions are mature enough for the relaunch.
The successful launch of stock futures has also provided experience for T-bond futures trading, he said.
But Zhu said it would be more appropriate for institutional investors rather than individual ones to participate in the trading of T-bond futures, and the CFFEX would take the requirements for stock futures investors trading as a reference.
The CFFEX is also doing research on other financial derivatives, like share options and interest rate futures, but it does not have a timetable, Zhu added.