Trust companies should manage risks to benefit from SIFs trading
August 04, 2011 | BY
Janice QuNew rules set qualification requirements
Trust companies can optimise their investment structures through the trading of stock index futures (SIFs), but corporate governance and risk control are the keys to success, say counsel.
The China Banking Regulatory Commission (CBRC) has announced new rules that allow trust companies to trade index futures on the China Financial Futures Exchange (CFFEX). The Guidelines on the Participation in Stock Index Futures Trading by Trust Companies (中国银行业监督管理委员会信托公司参与股指期货交易业务指引) (the Guidelines), which took effect on June 28, permits trading activities for hedge, arbitrage and speculative purposes by trust companies. These companies must satisfy qualification requirements before they are allowed to trade.
Wilson Huo, a Beijing-based partner of Zhong Lun Law Firm said trust companies required “sufficient preparation” before they can gain any advantage in the SIFs market.
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