Half of China's futures brokers have fallen under the control of
securities companies, as the country's financial institutions pave
way for the introduction of the long-awaited stock index futures,
said the country's securities regulator on Saturday.
The proportion was 10 percent last year, said Huang Yuncheng,
deputy director of the futures department under the China
Securities Regulatory Commission (CSRC), at a forum on China's
financial derivatives.
Securities companies were "chasing after the futures brokerage
resources in order to obtain the right to the upcoming stock index
futures trade", said Chen Nianbai, senior analyst with Guangfa
Futures Brokerage Co., Ltd.
According to CSRC regulations, financial futures business should
be exclusively licensed to futures companies in the early stage of
the futures market, while non-futures companies are prohibited from
conducting brokerage of such business.
But to satisfy the demand of securities dealers to participate
in the financial futures business and avoid consequential conflicts
of interest, the authorities permit securities firms to indirectly
take part in financial futures brokerage by holding stakes in
futures companies.
Small-and-medium-sized futures companies often welcome the
acquisition as they need capital to meet the registered capital
requirement to qualify for financial futures trading.
The registered capital of 43 futures companies have reached 100
million yuan (US$13.37 million), double the 50 million minimum
requirement for transaction settlement qualification, said
Huang.
A total of 110 futures brokerage companies have applied to
provide financial futures business and 54 have been approved.
CSRC chairman Shang Fulin said on Saturday that the country had
basically completed system and technical preparations for the
launch of its first stock index futures, but final preparations
would be made before the official introduction.
Simulation trading was started in October last year to test the
trading system at the Shanghai-based China Financial Futures
Exchange (CFFE), which was inaugurated in September 2006 to become
the country's first financial derivatives exchange.
(Xinhua News Agency October 29, 2007)
