SHANGHAI, Nov 24: A senior Chinese securities market regulator said China has a greater need for stock index futures after the country joins the World Trade Organization, the official Shanghai Securities News reported on Saturday.

After WTO, the need for stock index futures becomes more urgent, the paper quoted Wang Jianxi, deputy secretary-general of the China Securities Regulatory Commission, as saying.

If more foreign investors and fund raisers enter this market and it isn’t complete, then its integration with international markets could face more problems, Wang said.

China now has three futures exchanges and they trade only commodities such as copper, soybeans and wheat. The country has had no financial futures since 1995, when bond futures were scrapped after a price-rigging scandal.

Government officials and analysts have said China needs sophisticated financial hedging tools to attract institutional investors and develop the capital markets, an important fund-raising venue central to Beijing’s economic reform plans.

Market liquidity now shrivels whenever stock prices head south, because there is no way for investors to hedge risks.

After the latest market downtrend, people can see the lack of a mechanism to avoid risk is a market deficiency, Wang said. Chinese shares have fallen about 25 per cent from a peak in June, partly due to a crackdown on market corruption.

Securities regulators are planning a series of reforms to bring the decade-old financial markets to international standards, before inviting foreigners to invest in the vast A share markets which are now reserved for Chinese investors.

James Liu, the executive vice president of the Shanghai stock exchange, said in early November China would introduce a nationwide share index by the end of this year, which would facilitate the launch of index funds and futures.

China now has separate indices for its Shanghai and Shenzhen stock exchanges.

Wang was quoted by the newspaper as saying regulators were studying implementation of a unified stock index but gave no timetable.

China is expected to formally join the WTO in December.—Reuters