BEIJNG, Feb. 11 -- Chinese regulators have finalized high thresholds for potential investors trading the country's first stock index futures, effectively confining them to institutions and wealthy individuals initially to curb risks.
Investors must have at least 500,000 yuan ($73,250) in individual accounts to meet potential margin requirements, the China Financial Futures Exchange said in rules published late on Monday, finalizing earlier draft regulations.
Investors must also have passed relevant examinations on futures trading, must have participated in mock trading in index futures for at least 10 days and conducted at least 20 mock transactions, according the exchange rules published on its website, www.cffex.com.cn.
"The rules are formulated to guarantee stable, standardized and healthy operations of the index futures market, curb risks and protect legitimate rights and interests of investors," the exchange said.
Statistics issued by the China Securities Depository and Clearing Corp, www.chinaclear.cn, showed that fewer than 3 percent of Chinese retail investors had more than 500,000 yuan in their individual stock trading accounts by the end of last year.
China has lacked sophisticated financial tools used in foreign markets that might help it manage unanticipated domestic stock price moves, often resulting in violent selloffs and sudden rises that can hurt investors.
For instance, the benchmark Shanghai Composite Index jumped 80 percent last year after slumping 65 percent in 2008.
The government last month approved in principle the use of tools vital for hedging that are commonplace in many sophisticated markets, such as short selling, stock index futures and trading on margin.
Regulators have said index futures, which will be traded on the China Financial Futures Exchange in Shanghai, will take about three months to start up, possibly in April.