The China Insurance Regulatory Commission ("CIRC") issued the Interim Measures for Insurance Fund Participation in Financial Derivatives Trading (the "Measures") on October 12, 2012, which came into force on the same date. The Measures apply to participation in financial derivatives trading by insurance group (holding) companies, insurance companies, and insurance asset management companies legally established in China. The so-called financial derivative in the Measures refers to a financial contract whose value is based on one or more underlying assets, indexes or particular events, including forwards, futures, options and swaps. According to the Measures, insurance group (holding) companies and insurance companies may participate in derivatives trading directly by themselves or through entrusting insurance asset management companies or other professional management institutions that comply with CIRC rules on participating in derivatives trading.
Insurance companies that participate in derivatives trading are not permitted to engage in speculative trading, but are only permitted to hedge or avoid risks, such as hedging or avoiding risks of existing assets and liabilities.
The full Chinese text of the Measures is available here.