China eases restrictions on stock index futures trading

The Shanghai-based China Financial Futures Exchange (CFFEX) announced late Thursday that it was easing restrictions on domestic stock index futures trading in a "sound and orderly" way after "assessment of market risk and supervision."

In a move to "facilitate market functions," the CFFEX said, it will double the maximum limit on daily stock index future trading from 10 lots to 20 lots from Friday. Hedging transactions will be excluded from this restriction.

The CFFEX will also reduce margin requirements for non-hedging transactions on Hushen 300 index futures and SSE 50 index futures from 40 percent of the contract value to 20 percent from Friday's clearing, while that for CSI 500 index futures will be cut to 30 percent.

The margin requirement for hedging transactions will be kept at 20 percent.

Commission fees for intra-day position-closing will be lowered to 0.092 percent of the transaction volume from the previous 0.23 percent.

Regulators tightened stock index future trading in 2015 to curb speculation and stabilize the market following a stock market plunge.

The curbs have stabilized the capital market and prevented further losses, but restrained liquidity and functions of the stock index futures.

China launched the stock index futures in 2010 to boost the capital market, allowing investors to hedge risks and ease fluctuations in market.

Relaxing trading restrictions will meet hedging demand as the market enters a period of relatively stable recovery, said Ma Wensheng, president of Xinhu Futures.

Chinese stocks ended higher on Thursday, with the benchmark Shanghai Composite Index closing at a two-month high of 3,229.62 points. The smaller Shenzhen index closed 0.75 percent higher at 10,253.96 points.