Although the official launch time of government bond futures has not been determined, the ongoing network testing still makes the market full of expectations for the resumption of government bond futures that have been banned for 17 years. Some market players told reporters from Futures Daily that the market environment for China to launch government bond futures has basically matured, but a complete system and sufficient testing are still needed to ensure that it will play the expected role after its launch. Therefore, the "preparation period" for government bond futures may exceed that of stock index futures.
The conditions for launching government bond futures are good. It is understood that among the world's major futures exchanges, government bond futures cover all terms, including both medium and long-term as well as short-term varieties. For example, in the United States, there are four varieties of medium and long-term government bond futures transactions: 2-year, 5-year, 10-year, and 30-year. The short-term variety includes 3-month US Treasury bill futures. The London International Financial Futures Exchange, with strong international characteristics, not only conducts domestic government bond futures trading, but also trades US, Japanese, German, and Italian government bond futures.
In the early 1990s, China had once conducted government bond futures trading, but the regulatory mechanism at the time was not yet perfect. After the "327" and "319" government bond futures risk incidents occurred consecutively, on May 17, 1995, the China Securities Regulatory Commission announced the suspension of government bond futures trading. In recent years, with the continuous development of China's economy and the improvement of the government bond market and the futures market, the conditions for restarting government bond futures have become increasingly mature. Especially the successful launch of stock index futures has raised the financial regulatory level of China's capital market to a new height, which can provide reference for the regulation of government bond futures.
"On one hand, most interest rates in China's financial market have already achieved marketization or quasi-marketization. On the other hand, the government bond market has laid a good foundation for the launch of government bond futures in terms of capacity, liquidity, and other trading conditions, as well as infrastructure, investors, and other environmental conditions," said Guan Tongwei, director of the Capital Market Research Institute of Guangdong University of Finance. Currently, China's government bond balance has reached 7 trillion yuan, the annual settlement volume of the interbank bond market has long exceeded 100 trillion yuan, and the custody volume has also exceeded 10 trillion yuan. However, there is a serious lack of financial tools for hedging interest rate risks in the market, creating a strong demand for government bond futures.
The key lies in the rule design and regulatory measures. At the 7th China (Shenzhen) International Futures Conference held in December last year, Zhu Yucheng, general manager of China Financial Futures Exchange, mentioned that China's large amount of government bond balance forms a huge spot market. Developing government bond futures could enhance the activity of government bonds in the secondary market and provide a good response to the exchange market. Regarding this, many industry insiders raised doubts: 80% of China's 7 trillion yuan worth of government bonds are held by commercial banks, and 80% of these are held by the four major state-owned banks. Once government bond futures are restarted, the number of service objects may be very limited. Moreover, since most government bonds are not held by most institutional investors, it may affect the function of government bond futures.
"In the international arena, the concentration of financial resources in large financial institutions is a common phenomenon. In terms of government bond trading, there are only about a dozen government bond market makers for the New York branch of the Federal Reserve, and government bond holding institutions are also concentrated, but this has not hindered the development of the US government bond futures market." Guan Tongwei believed that whether government bond futures, as an interest rate hedging tool, can be accepted by the market mainly depends on its rule design and regulatory measures. As long as this work is done well, it can attract a wide range of investors to participate and gradually optimize the current structure of government bond holdings in China.
"Taking the statistics at the end of 2008 as an example, the transaction subjects of China's interbank bond market have increased from the initial 16 head offices of commercial banks to 8,299 entities, including other financial institutions and other institutional investors. In addition, the over-the-counter trading of book-entry government bonds started in 2002 also allowed individual investors indirect access to the interbank market." Wang Hongying, deputy director of the Mid-term Research Institute (Weibo), believed that judging from the government bond futures simulation trading contract published by the China Financial Futures Exchange, the face value of 1 million yuan seems to be designed for institutional investors, intentionally restricting participation from small and medium-sized retail investors. "Of course, how effective it will be still requires long-term testing," Wang Hongying estimated that the "preparatory period" for government bond futures might be longer than that of stock index futures, and the participation threshold would not be lower than that of stock index futures.