China is expected to launch a government bond futures market soon, Guo Shuqing, chairman of the China Securities Regulatory Commission (CSRC), said on Wednesday, as Beijing moves to increase liquidity and aid price discovery in its rapidly developing fixed income markets. The introduction of a government bond futures market has been expected since the CSRC began simulated trading to test the system in February 2012.
The introduction of bond futures and other hedging derivatives is expected to buttress the development of China's bond market, which has grown rapidly in recent years but remains underdeveloped in comparison to bond markets in developed economies.
Bond futures also will play a role in regulatory attempts to liberalise interest rates by providing a wider variety of fundraising channels with a more diverse spread of yields than officially controlled rates available from banks.
China had 8.07 trillion yuan ($1.30 trillion) worth of government bonds outstanding at the end of 2012, up 9%from 2011, data from China's main bond clearing house showed.