CFFEX Invites Submissions on Futures Market Development

The CFFEX is calling for research into the opening up of its financial futures market to foreign investors, drawing lessons from overseas exchanges.

The CFFEX (China Financial Futures Exchange) is calling for research into the development and opening up of its financial futures market, signalling that the exchange might be looking to grant foreign investors greater access to domestic derivatives products.

Twists and turns

China launched its first financial futures on the CFFEX in April 2010. During the stock market turmoil of 2015, restrictions were imposed on index futures trading, though these have largely been lifted in recent years.

Earlier this year, the regulators announced a plan to start re-opening the domestic treasury bond futures market to some banks and insurers on a pilot basis, for the first time since restrictions were imposed in 1995. ICBC, Bank of China, and Bank of Communications were the first three institutions approved to participate in the pilot.

Currently, foreign investors can only trade stock index futures in China through the QFII and RFQII programmes, but only for hedging losses; not for speculation. However, it has been reported that Chinese regulators have been mulling an overhaul of its futures market to allow global investors to also execute bearish trades.

“Although the industry has undergone many twists and turns, with the passage of time, financial futures as a market-oriented risk management tool has become more and more popular in China in recent years, and has fully withstood market tests,” the CFFEX said in a statement.

Winning papers

The exchange is calling for the submission of research into the development of the domestic futures market, ahead of a planned symposium on the topic.

The research papers submitted can cover themes such as:

  • the function of financial futures options, including under new market conditions as a result of Covid-19
  • the opening of financial futures to the outside world, including its necessity, risks and potential regulatory requirements for participants – drawing lessons from overseas exchanges
  • legal and regulatory systems, including on settlement models, market maker supervision, and rules for high-frequency traders
  • the relationship between futures and spot markets
  • the application of treasury bond futures at banks and insurers, and the use of financial futures in pension funds and corporate annuities
  • product innovation, including short-term interest rate futures, ultra-long-term government bond futures, and foreign exchange derivatives
  • financial technology, including its use for technical supervision, market analysis, and information system development

The CFFEX is asking for 5000-10,000 words to be submitted by 31 August.

The winning papers will be selected and then released in early October, and included in presentation materials at the upcoming symposium.

More details are available here.

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