Around 74 percent of futures companies have recently passed the much stricter Chief Risk Officers Test organized by the securities regulator, which indicates the likelihood of a much more effective risk management mechanism for trading index futures. An average of 90 percent of attendants have passed similar tests.

"Theoretically, the introduction of index futures would not have a large impact on the longer-term trend of the stock market, but index futures, serving as a risk-hedging tool, may help stabilize the stock market," said Hu Yuyue, head of securities and futures institute of Beijing Technology and Business University.

The CICC source also said the introduction of hog futures may face problems of delivery difficulties because there are too few large-scale hog farms in China that can meet a delivery on demand.

Hu said hog futures contracts may "serve more as a price barometer for breeders and food processors", helping stabilize wide swings in pork prices and push forward the process of restructuring China's hog industry.

(China Daily July 24, 2008)