Proposal awaits approval from authorities, says NPC deputy
China's planned crude oil futures will likely see the first attempt to inject foreign investments into the mainland's commodity derivatives market, after a long absence by foreign investors, a top official at the mainland's largest futures exchange said on Wednesday.
The proposal is waiting approval from the State Council, China's cabinet, and the exchange is also in talks with the State Administration of Foreign Exchange on the matter, said Yang Maijun, president of the Shanghai Futures Exchange and a deputy of the 12th National People's Congress.
"Foreign institutional investors will first have to get approval from the futures regulatory department under the State Council, and then apply for an investment quota from the SAFE before entering the mainland futures market," said Yang.
The exchange will provide a special trading platform for foreign investors.
"The quota will be only approved for a specific futures product, for example, crude oil. Within that quota, foreign fund holders will be able to freely exchange renminbi with other currencies," said Yang.
The top securities regulator has banned foreign investors from the mainland's futures markets since the 1990s.
Also, to accelerate cross-border futures trading, the exchange plans to launch after-hours trading by the end of the year.
"We plan to add an early-trading period, from 9:30 pm to 2:30 am Beijing time," Yang said.
The current trading times for the exchange are from 9 am to 11:30 am and from 1:30 pm to 3 pm.
The exchange has finished designing the basic trading structures and started international trading tests on Jan 18, he said.
"We are communicating with the relevant government departments about possible tax cuts or tax-free policies for foreign futures investors," Yang added.
He added that there are plans to allow overseas investors to trade other futures contracts, such as nonferrous metals and precious metals.
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