Guo Shuqing, the new chairman of the China Securities Regulatory Commission (“CSRC”), announced that his agency will speed up efforts to offer more equities, bonds and funds related investment products. Possible investment products include government bond futures and other commodity futures, like crude oil, precious metals, and options.
Guo aims to grow China’s infant derivatives market. Last year, the CSRC introduced credit-default swaps and stock index futures, giving domestic investors more effective hedging tools.
However, China does not have a pristine history in the futures sector. The last time the Chinese government allowed trade in government bond futures, the market was plagued with rampant speculation and price manipulation thanks to poor regulation. The government bond futures market was officially closed in late 1992.
The CSRC commissioner has also pledged to raise the scale of direct financing, in order to diversity systemic risk in the banking sector. The Commission will petition institutional investors to increase their stock market investments. Foreigners will also be allowed greater investment access to the yuan-dominated A share market by raising the investment quota for Qualified Foreign Institutional Investors and expanding the Renminbi QFII program.