Regulator mulls expanding banks' access to China's futures market

China is considering whether to expand commercial banks' participation in the country's futures trading market, the stock market regulator said at a forum in Shanghai on Wednesday.

Commercial banks could be permitted to trade future contracts other than gold and silver, such as energy and agriculture products, in the future as authorities hope to encourage participation by institutional investors.

Their participation could help improve the pricing of commodities in China's futures market, according to Fang Xinghai, vice chairman of China Securities Regulatory Commission.

Currently, investors are mostly corporates, individuals and asset managers. It is not yet known whether foreign banks will be involved in this push for greater participation, although foreign companies' subsidiaries in China have been allowed to trade.

In addition to domestic commercial banks, Fang said the market should be more open to offshore investors, without elaborating.

Given the limited access to the onshore futures market, some Chinese commercial banks have been trading futures offshore amid growing hedging and asset diversification demand by their corporate and high net worth individual clients.

Fang added that regulators will closely monitor volatilities in the domestic futures market. Regulators have already raised margins, transaction fees and imposed limits to ease price swings.