It has not yet announced the date from which it will allow
trading to take place.
China’s decision was confirmed after the close of
the Strategic and Economic Dialogue meeting in
"China will permit qualified foreign-invested firms duly
incorporated in China to carry out stock index futures business
in accordance with relevant laws and regulations and will allow
QFFI to invest in stock index futures products," the two
countries said in a joint statement.
Though the US has pushed for the regulatory changes in China,
none of the 95 registered QFII firms headquartered in the US
will be able to trade the index contact until the Commodity
Futures Trading Commission gives clearance.
Under US law, foreign boards of trade that wish to permit their
US members and other participants in the country to have direct
access to their electronic trade matching system, not through
an intermediary, must request no-action relief from the
CFTC’s Division of Market Oversight.
The impact of the move will depend on the rules the
country’s regulator imposes on the foreign
The China Securities Regulatory Commission recently issued
draft guidelines for broadening the types of firms allowed to
trade index derivatives. These said QFIIs could only use them
for hedging. Clarification is needed on which 'A’
share positions could be hedged using the futures.
It is also unclear unsure how many contracts QFIIs would be
allowed to trade.
Dean Owen, China chief representative in Newedge’s
Shanghai representative office, said he believed the impact on
trading volumes of the QFII participation would be determined
by the quota imposed on the foreign institutions.
"The existing total QFII quota is less than $20bn, so if the
futures limit is a percentage of that then I
wouldn’t expect it to have too much of an impact
on trading volumes," Owen said.