China needs to develop a financial derivatives market in order
to reach its goal of becoming a leader of international finance,
the head of the country's financial futures exchange said
yesterday.
General Manager of the China Financial Futures Exchange Zhu
Yuchen said that the country should speed up the development of the
financial derivatives market, including futures and options.
"For a long time, our practice has been strengthening
supervision in the financial market, but the current problem is
that, in an open environment it becomes impossible to keep this
very isolated 'island'," Zhu said during the Fifth Session of the
10th National People's Congress yesterday.
"Emerging markets, including China, are at the most risk,
because these markets are only half open. Major international
investors are seeking opportunities in these markets, which are
most vulnerable," he added.
These remarks came one day after regulators announced the
country would launch stock index futures in the first half of this
year. Officials had previously said they might initiate the trading
of stock index futures early this year.
But the Shanghai-based China Financial Futures Exchange founded
last September is apparently taking a cautious approach to the
introduction of index futures. Singapore's futures exchange has
already begun trading financial futures contracts based on Chinese
stocks, and yuan derivatives are traded in the United States.
Zhu said that if China fails to take measures to control the
situation or fails to make good use of its home-base advantage, it
could lose these strategic resources to overseas markets.
"Gaining an advantage in financial derivatives ensures a leading
role in the market," Zhu said.
Today, China is the only nation without financial futures among
the top 20 countries in terms of gross domestic product. Futures
also provide an economic resiliency.
(China Daily March 8, 2007)