THE government will allow trading in financial futures contracts and options for the first time as it seeks to spur development of the nation’s capital markets and provide more choice to investors.

Brokerages need at least 30 million yuan (US$3.9 million) in capital to trade futures contracts and options for interest rates, the yuan and equity indexes, according to rules from the State Council, or Cabinet, published in the China Securities Journal on Saturday.

The rules, which take effect from April 15, pave the way for index futures and options to trade on Shanghai’s seven-month-old derivatives exchange. Regulators are trying to widen the investment options for 33.5 billion yuan of deposits in a stock market where the value of transactions last year equaled almost half of China’s economy.

China’s 180 futures brokers are currently restricted to earning fees by trading commodities for clients on the nation’s US$2 trillion futures market.

Under the new rules, brokerages will still be barred from buying or selling futures contracts for their own accounts. They must also meet government standards for risk control, net assets, capital, debt-to-asset ratios and working assets, according to the rules. (SD-Agencies)