Trading Volume of Futures Hits Record High

The trading volume of the Chinese futures market hit an all-time high in the first 11 months of the year, boosted by the introduction of new contracts.

Trade volume rose 45.86 percent year-on-year to 1.9 billion lots in the first 11 months of this year. In terms of value, volume increased 61.93 percent year-on-year to 246 trillion yuan (US$40.37 trillion) in the same period. That's the highest amount since the country first set up a futures market in 1993.

Financial futures, especially stock index futures, led the growth. The China Financial Futures Exchange - the country's biggest marketplace for financial futures by trading volume - said that trade volume increased 98.29 percent year-on-year to 130 trillion yuan in the January-November period. Stock index futures' trading volume now takes up 9.4 percent of the overall market.

Beijing CIFCO Futures Co Ltd, a futures brokerage, wrote in a recent report that a lackluster stock market turned investors' attention to stock index futures, which offer opportunities to cash in on a bear market.

"Investors' need to hedge the stock market with index futures helped push up trading volume," CIFCO said in the report.

The market-entrance threshold for stock index futures was also lowered this year, from 500,000 yuan to about 3,500 yuan.

That helped bring in more retail investors.

Gold and silver trading also soared in the second half of the year, after major exchanges started overnight trading. The Shanghai Futures Exchange saw its accounts more than double to 60,800 after overnight trading was introduced on July 5. The Dalian Commodity Exchange's new egg futures saw a trading volume of 10.61 billion yuan in its first trading day on Nov 8.

Seven new types of futures contracts hit the market this year, including coke, eggs and iron ore, which also helped to ignite investor enthusiasm. Three more types of contracts are expected to be launched this year, such as plywood and fiberboard.

The futures market benefited from a spillover effect from other underperforming capital markets this year, said Zhan Xiao, an analyst with Haichao Securities Co Ltd.

"The futures market is generally in better form than other markets, such as property and equities, so investors moved their funds to futures," Zhan said.

He believes that trading volume in China's futures' market will keep expanding, as Beijing loosens controls on State-owned companies' hedging activities and introduces more contracts into the market.

Chinese authorities have said recently that rules on State-owned companies' hedging activities may be loosened to deepen their involvement in the futures market.