Investors give a cautious welcome to bond futures

China resumed trading in government bond futures yesterday after a nearly two-decade ban, ending slightly higher as traders preferred to play safe and watch from the sidelines on the first day of trading.迷你倉出租The 18-year ban on bond futures trading was lifted yesterday to diversify risk hedging tools for investors and promote the market-oriented reforms of interest rates.“Investors tended to take a cautious stance on the first day of the trading,” said Jiang Chao, a bond researcher with Haitong Securities, reflecting on the less than enthusiastic response from the market.The five-year government bond futures for settlement in December, the most actively traded of the three contracts available, closed at 94.170 yuan (US$15.4), up a marginal 0.002 percent from the base price of 94.168 yuan, according to the China Financial Futures Exchange, where the new derivative is traded.The contract opened at 94.220 yuan and briefly hit an intraday high of 94.540 yuan.“Lower-than-expected base prices set the tone for the good start for the new derivative,” said Hong Hao, chief strategist at BOCOM International Holdings Co Ltd.Futures for settlement in March 2014 were up 0.11 percent and June 2014 contract added 0.13 percent. A total of 36,635 lots of contracts, each of them valued at 1 million yuan, changed hands during the day.The reintroduction of government bond futures is considered another bold step toward interest rate liberalization after freeing up of the lending rates in July.It reflects the authorities’ efforts to push reforms in迷你倉the world’s second largest economy.  Xiao Gang, chairman of the China Securities Regulatory Commission, said the relaunch of government bond futures was a significant breakthrough in building a multi-tier capital market in China.He said it will play a key role in Shanghai’s push to become a global financial hub. Trading of bond futures is conductive to establishing a market-oriented pricing mechanism and to promote interest rate liberalization while providing hedging tools for investors at home and abroad, Xiao said in a speech at the launch of the government bond futures yesterday.China launched government bond futures in 1992 on the Shanghai Stock Exchange. But trading was halted in 1995 after a brokerage firm, Wanguo Securities, sent prices crashing in the last eight minutes of trading by selling massive orders as it tried to rescue a losing short position, causing massive losses to other traders. The brokerage went bankrupt after the market regulators declared the orders invalid. Its chief Guan Jinsheng was later sentenced to 17 years in jail.Ever since, China has been cautious about resuming bond futures trading to avoid a repetition of such scandals.Now, only qualified brokerages, mutual funds, private equity and individual investors are allowed to trade bond futures while key participants in the spot bond market, including commercial banks and insurers, have been excluded.A slew of risk control measures such as higher margin requirement and limits on daily movement have been imposed to ensure the stability. 儲存倉