China's first index futures contract ends smoothly

11:12, May 22, 2010      

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The May contract of China's stock index futures has been delivered smoothly, marking the end of first month of futures trading in China.

The settlement of the May contract on Friday was smooth, without triggering sharp declines or volatility in the spot market, Saturday's China Daily reported.

Investors worried that the expiration day would cause sharper volatility on the spot market due to more active trading of index futures as investors rushed to close positions for May and changed to the June contract on that day.

"The trading volume and the holdings of the May contract dramatically decreased in the past month, which significantly reduced the incentive of price manipulation in the spot market," the newspaper quoted Yang Cui, an analyst at Changjiang Securities, as saying.

Chen Zhenzhi, an analyst at Guangfa Futures, said the impact of the expiry day was very limited due to the fact that most institutional investors have not participated in index futures trading.

The stock-index contracts, agreements to buy or sell the Hushen 300 Index at a preset value on an agreed date, are designed to allow investors to bet on and profit from both gains and declines in the market.

The index futures was launched at the China Financial Futures Exchange (CFFEX) and started trading from April 16, 2010. The CFFEX has set the base value for all the four contracts at 3,399 points.

Source: Xinhua

(Editor:燕勐)

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