BEIJING (Commodity Online) : China is likely to carry out a pilot program to allow three to four domestic brokerages to broker trades on overseas exchanges, reported China Knowledge.
The list of companies that will join the trial program may be finalized by as early as next month.
Trading houses may include COFCO Futures Co, China International Futures Co and Nanhua Futures Co.
The China Securities Regulatory Commission may roll out strict rules for the program, including the type of eligible investors and limits on their trading volumes in the overseas markets. The restrictions are due to the inconvertibility of China's RMB currency.
If the proposed program is launched, the businesses of local brokerages will be boosted because those brokerages are able to serve the growing demands of local companies for overseas hedging.
The program would also break the monopoly of foreign brokerage through allowing domestic enterprises to hedge overseas through local agencies.
The China Banking Regulatory Commission or CBRC, the country's banking watchdog, will soon release guidelines that will allow trust companies in China to trade stock index futures, said Min Luhao, a senior official with commission.
So far, securities brokerage firms, mutual funds and Qualified Foreign Institutional Investors have been approved to participate in stock index futures trading, according to an earlier report from China Knowledge.
China's futures transaction value jumped 22.58% year on year to RMB 56.59 trillion in the first five months of this year, while the trading volume plunged 27.36% year on year to 412.04 million lots in the period, according to statistics from the China Futures Association.
In May this year, the volume of futures transactions was 93.81 million lots, up 14.91% month on month but down 31.18% year on year, and futures trading value hit RMB 12.03 trillion, increasing 10.01% month on month but declining 12.39% year on year.
