China Set To Become World’s Leading Futures Market

by Mary Swire, Tax-News.com, Hong Kong

27 October 2004

Pent-up demand from investors and companies will allow China’s futures markets to become the world’s largest by volume once trading restrictions are lifted, the Financial Times has reported.

This is according to Allan Zavaro, head of Dutch investment bank ABN Amro’s futures business, who has told the FT that the company considers the Chinese futures markets to be easily the most promising amongst the world’s emerging economies.

"In the futures market, we are making a bet on China, India and Brazil but by far the biggest bet is on China," Mr Zavarro told the paper.

China’s three futures exchanges are already among the world’s top ten in terms of volume, although the total number of contracts traded was dwarfed by the Chicago Mercantile Exchange, where 1.9 billion futures contracts were traded between January and August 2004.

By comparison, Shanghai, Dalian and Zhengzhou traded just 214 million contracts during the same period. However, volumes in China are limited by restrictions that prevent the trading of financial futures contracts, such as interest rates, government bonds and currencies, which make up the vast majority of all futures contracts traded globally.

Nevertheless, Zavaro believes that demand in the Chinese market will be such that, once these restrictions are lifted, it will overtake volumes on the US market within 3 years.

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