China to Limit Foreign Trade in Index Futures: Report
China will limit the participation of foreign investors in its index futures market to no more than 10 percent of their permitted investment quotas, the official China Securities Journal reported on Tuesday.
Funds under the Qualified Foreign Institutional Investor (QFII) scheme would be allowed to trade in China’s three-month-old index futures market for hedging purposes and any trades must be closely linked to the spot market, the newspaper reported, citing an unidentified source.
The investment limit would be set at 10 percent of their initial permitted quotas under the QFII scheme and the securities regulator was expected to invite public opinions on the matter soon, the report said.
In April, China launched index futures – agreements to buy or sell an index at a set price on a future date – to provide investors with a tool to manage risk in the country’s volatile stock market.
China’s first batch of index futures contracts are based on the CSI300 index .CSI300 of largest mainland-listed companies by turnover.
China launched the QFII program in 2003, allowing selected foreign institutions to invest in China’s main yuan-denominated A-share stock market and the government bond market.
As of the end of June, China had granted quotas worth about 120 billion yuan ($17.70 billion) to 89 QFII companies, the Securities Journal said.