The China Securities Regulatory Commission (CSRC) on Friday announced that foreign investors can trade Chinese government bond (CGB) futures from April 24.

Announced in conjunction with the People's Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE), the measures indicate that qualified foreign investors (QFIIs) can participate in CGB futures trading for hedging purposes.

CGB futures contracts under the China Financial Futures Exchange (CFFEX) cover 2-,5-, 10- and 30-year tenors.

Gunawan Wijaya, director, portfolio management, prime brokerage and investment solutions, CGS International Securities welcomed the move and said: "This is certainly a positive measure which not only increases the profile of the Chinese bond market and attract capital inflows in the longer term but also enable existing investors the ability to hedge against interest rates volatility."

Vincenz Bracke, international sales and marketing manager at BANDS Financial, said that allowing foreign investors to hedge using CGB futures is a natural extension of China's broader market opening.

He added: "Following the internationalisation of nickel and recent moves across lithium, petrochemicals and bulk freight, it underlines that China's capital markets are increasingly accessible and open for business."

The CSRC said that the move is in line with the continuous expansion of the investment scope of QFIIs, adding to the interest rate risk management tools that overseas institutional investors can access.

The measures will also enhance the attractiveness of RMB bond assets while promoting the development of the bond futures and spot markets, said the CSRC.

CFFEX figures show that the average daily volume of CGB futures in 2025 reached 324,100 contracts while average daily trading value was Rmb399 billion (£43 billion).

According to Orient Futures analyst Zhang Can Dong, as of March this year, foreign institutions held Rmb1.95 trillion in Chinese treasury bonds, accounting for approximately 5% of the total Chinese treasury bond market.

At the end of March 2026, the equity scale of foreign traders in China's futures market exceeded Rmb50 billion, while the total equity scale of the entire futures market exceeded Rmb2.4 trillion.

He believes that in the long term, the liquidity of the treasury bond futures market will also increase.

"If the proportion of foreign institutions' holdings in treasury bond futures can reach parity with that in the spot market, the treasury bond futures market will see an increase of nearly 50,000 contracts in open interest, further improving market liquidity," he said.

He added that with increased risk management tools, foreign institutions' willingness to hold Chinese bonds will rise, which will also help enhance the attractiveness of Rmb assets.

Eric Zou, partner at Merits & Tree Law Offices, said: "Global asset managers are waiting for the implementation of the policy so they can increase their investments in the China market."

With access to effective hedging instruments, QFIIs can avoid frequent cross-border capital flows, instilling more stable investment behaviour.

Zou said that as early as 2020, when the CSRC, PBOC and SAFE amended the QFII regulations, they had already proposed to gradually expand the scope of investment.

"Although government bond futures were within the expanded investment scope, the specific timing was uncertain," he said.

He added that the restriction around participation for hedging purposes only is consistent with the arrangements adopted in 2025 when QFIIs were allowed to invest in exchange traded ETF options.

"This reflects a prudent and cautious approach to market opening," he said.

The development of a Chinese government bond futures market is the next step in supporting demand for rates hedging products, as RMB derivatives use increases, according to an HSBC executive.

The China Financial Futures Exchange (CFFEX) is planning to launch four government bond futures contracts, expanding its suite of interest-rate derivatives.