Feasibility Study On The Stock Index Futures In China

With the development of the securities market in China over the past decades, the scale and liquidity of the stock index futures has been guaranteed. As a result, it has created favorable environment for launch of the stock index futures. Considering the huge need of hedging due to the volatility of stock indices, numerous investment subjects come along with the increasing number of institutional investors. Development of the futures market pays the way for .the launch of the stock index futures.Currently, lack of the legislative and regulatory systems is the major bottleneck for introduction of the stock index futures. Missing of the related laws tops the radical cause. The existing laws and regulations on futures are mainly designed for the commodity futures, lacking of directional regulations on stock index futures and financial derivatives. Thus, relevant regulations need establishing on a series of issues, such as development, listing, transaction, risk control and regulatory supervision of stock index futures to lift the legal barriers of transaction subject, object and bourses hindering the launch of stock index futures, otherwise it is impossible for the stock index futures to be transacted under such condition.The call for launch of stock index futures is on the rise in China at present, however, the launch of stock index futures is still in the air. The major reason lies in that certain shares of the listed companies of China can not be exchanged, so call" full circulation", which gives rise to the launch of stock index futures not included on the agenda. Based on the current situation, this article gives a summary of the experiences and lessons we may learn from the foreign markets. The author sets out the feasibility of launch of the stock index futures in China, and discusses the major problems facing launch of the stock index futures, and point out that eliminating the bottleneck for launch of the stock index futures in the current stage depends on establishment and perfection of the legislative and regulatory systems, other than the full circulationissue. What's more, launch of stock index futures will help the investors hedge the system risks that may come with full circulation. Finally, this article explains that, to launch the stock index futures, the governing legislation should be completed in advance. It is suggested that opening of the stock index futures market be put on the agenda as early as possible.This article comprises seven chapters. Chapter 1 introduces the history and status quo of stock index futures. Chapter 2 analyzes the effect of stock index futures on price and capital of the actual market and its relation with financial crisis. Chapter 3 gives analysis of the necessity of launch of the stock index futures in China. Chapter 4 depicts the development strategies of the stock index futures in some emerging markets, and generalizes their successful experiences. Chapter 5, by reviewing the development of the stock actual market and commodity futures market, represents the existing basic conditions for launch of the stock index futures in China. Chapter 6 points out the major problems confronting immediate launch of the stock index futures in the aspects of legal environment, regulatory system and market conditions. Finally, Chapter 7 argues about the feasibility of immediate launch of the stock index futures, and comes up with relevant countermeasures.