Multiple news agencies report that stock index futures may finally begin trading on the China Financial Futures Exchange as early as next month. They will become the first equity derivatives traded on the mainland. The index futures contracts will be based on the Shanghai-Shenzhen 300 index. China will also allow foreign firms participating in the Qualified Foreign Institutional Investor (QFII) program to trade the index futures. Approved foreign QFII financial institutions are the only foreign entities that can invest in China’s capital markets. They currently have an aggregate investment quota of US$10 billion, and the South China Morning Post reports that Beijing will open the QFII quota by an additional US$1 billion to trade index futures. Many see index futures as an important step in the maturation of China’s markets. For the first time, China will introduce the concept of "short-selling" stocks. Derivatives could help smooth out some of the volatility in the stock markets, as investors will be able to bet on downswings in addition to upswings.

China had hoped to launch index futures in the spring of this year, but postponed the launch to beef up the regulations and increase training for domestic futures traders. CSRC has already granted futures trading licenses to 40 firms. According to the South China Morning Post, CSRC will grant licenses to at least 60 more firms before trading begins.