In a major step toward introduction of financial futures
trading, the China Securities Regulatory Commission (CSRC) has
licensed the first two commodity futures companies to operate
brokerage business in financial futures.
The two companies, Beijing Yin Jian Futures Co Ltd and Shanghai
Jiu Heng Futures Brokerage Co Ltd, are believed to have won the
CSRC approval for their well-established security record of
business operation and credible mechanism of risk management,
market sources said.
Guo Zhinan, deputy manager of Shanghai Jiu Heng Futures
Brokerage Co Ltd, said the approval was an indication of his
company's efforts to meet the high standard of risk management and
operational integrity demanded by the China Financial Futures
Exchange (CFFEX).
"A stable growth potential is our competitive edge, although our
current turnover scale is not as big as some other futures
companies," Guo said.
Many more commodity futures companies are expected to be
licensed in the coming months, sources said. There are around 160
commodity futures companies in the country and many of them have
applied for a license.
CFFEX hasn't specified the target date for the launch of trading
in stock index futures, the first product. But industry insiders
said preparations for the opening, including mock trading sessions
to help familiarize traders, have been on for months.
The licensing of the first two commodity companies indicates the
CFFEX's membership system is taking shape.
"Specifying the exchange's membership system is an important
part of preparing for the final launch of the index futures and the
approval of broker members is the initial step," said Li Jingyuan,
an analyst with Hai Fu Futures Co Ltd.
In addition to broker members, there are also trading clearing
members and all-round clearing members within the CFFEX membership
system.
A trading clearing member is allowed to conduct clearing
business for its clients, without having to clear the transaction
through the all-round clearing members, who are qualified
institutions like banks and other futures companies.
(China Daily July 17, 2007)
