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China – Shanghai Stock Exchange To Trial Same-Day And Options Trading On Certain Exchange-Traded Funds.

14 January, 2015

 


One of China’s three official stock exchanges is to trial allowing same-day (T+0) and options trading on certain exchange-traded funds (ETFs), according to press reports.

From 19 January, Shanghai Stock Exchange will settle trades on bond-based ETFs, money market ETFs, gold-related ETFs and ETFs that cross Shanghai and overseas markets on the same day that they are bought or sold, Reuters reported. Market regulator the China Securities Regulatory Commission (CSRC) confirmed to the agency that the exchange would also trial trading in options from 9 February.

 

Reuters said that the changes would allow investors to trade stocks that were falling in value quickly, as well as allowing them to hedge their investments through the use of options.

 

The Shenzhen Stock Exchange will also trial T+0 trading on ETFs, but will not be trialling the trading of options, according to Reuters.

 

An option is a financial contract which gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a certain date. An ETF is a tradable investment fund made up of other assets, such as stocks and bonds, and which typically tracks the value of another stock or bond index.

 

Trades on Chinese stock exchanges have been restricted to T+1 since 1995 to discourage market speculation. This means that any transactions currently settle one day later.

 

Pinsent Masons

 

For further information, please contact:

 

Andrew Masraf, Partner, Pinsent Masons

andrew.masraf@pinsentmasons.com

 

Homegrown Capital Markets Law Firms in China 

 

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