Large SOEs Given Licenses for Oversea Futures BusinessChina Securities Regulatory Commission (CSRC) is as reported lately to grant licenses for oversea futures business to a few qualified large state-owned enterprises (SOEs).June 19 saw the CSRC release a provision on the administration of SOE's foreign futures business but it didn't breathe the enterprise names, asking these enterprises to conduct futures transactions for a hedge against possible economic losses, and speculations are banned. Since 1970s some large SOEs of China have used futures transaction for a hedge against possible economic losses in spots trade. It turned out effective but risks still followed to cause losses owing to the lack of strict management system within enterprises. Because of the specific situation in oversea futures market China now still resorts to a license system under a guiding principle of caution and stability. After a strict examination by relevant departments the granting of license has to be approved by the State Council and enterprises are required to operate in accordance with the provision. Enterprises not approved by CSRC must immediately put an end to their futures business and handle carefully the remaining problems to avoid various risks that may incur. China will gradually meet the futures demand of domestic enterprises as experiences build up on business operation and government administration. By PD Online Staff Li Heng |
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