The China Securities Regulatory Commission issued final interim measures to permit trading by overseas investors on China’s futures markets. Pursuant to these measures, overseas customers will be permitted to trade approved futures either through Chinese or overseas brokers, or directly through exchange facilities. Only local brokers can directly clear approved products for foreign nationals on domestic exchanges. Under the proposed interim measures, it appeared possible that qualified overseas brokers might be authorized to establish entities in pilot-free trade zones in China to offer clearing services too, but this proposal was eliminated in the final interim measures. (Click here to access an overview of the proposed interim measures in the January 23, 2015, client advisory, “China Regulator Proposes to Permit Designated Domestic Futures Contracts to be Traded by Foreigners,” by Katten Muchin Rosenman LLP.) Local newspapers in China reported that CSRC proposes to complete work to launch the crude oil futures contract on the Shanghai International Energy Exchange (INE) over the next three months; this would be the first China futures product accessible to foreigners (click here to read a sample article). Previously INE published proposed rules to accommodate trading in its crude oil contract; these rules have not yet been finalized. (Click here for further details regarding these proposed rules in the article, “Shanghai International Energy Exchange Releases Proposed Rules to Govern Overseas Traders” in the March 22, 2015, edition of Bridging the Week.)
Helpful to Getting the Business Done: After so many years of anticipation, it is very significant that the opening of China's futures markets to foreigners may be only three months away. This is an exciting development that presents potential new opportunities to a wide range of futures market participants. Traders, end users, and Futures Commission Merchants should be studying these new rules to determine how they may be beneficial to their businesses.