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BIZCHINA / Center

First futures license issued

By Wang Lan (China Daily)
Updated: 2007-08-25 10:26

SHANGHAI: The country's securities watchdog has issued a license to the
first commodities futures trading company qualified to apply to become a
member of the China Financial Futures Exchange.

The move was widely seen as an indication that the China Securities
Regulatory Commission (CSRC) and the exchange are ready to establish the
clearing facilities necessary for the trading of financial futures and to
minimize counter-party risks.

Representatives of the Hangzhou-based Zhejiang New Century Futures Co
told China Daily on Friday the company had won approval from the CSRC to
do clearing business in financial futures. They said the company was
preparing to apply to the exchange for membership.

The exchange has said that it plans to introduce stock index futures
based on the CSI 300 indicator as the first such product. But it has not
specified a target launch date.

A crucial part of futures trading, the clearing system facilitates the
matching of trades, ensures smooth deliveries and keeps track of
counter-party risks arising from margin trading.

Zhou Zhiqiang, a futures analyst at Great Wall Futures Co, said issuing
the first license for a clearing business was a key step toward the
formation of the membership system.

"Clearing members occupy a core position among the participants of the
upcoming index futures market," Zhou said. "It is seen as a prelude to
the introduction of all-round and special clearing members, leading to
the completion of the whole membership system."

Zhang Fan, a futures analyst at Changjiang Securities, said: "As a
follow-up to the flood of brokerage business licenses issued during the
past two months, clearing business licenses are expected to be issued in
the coming month or two."

Analysts said the decision to issue clearing business licenses had
accelerated the process of introducing index futures. But the
time-consuming process of assessing the qualifications of all-round
clearing and special clearing members has not started.

(For more biz stories, please visit Industry Updates)

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