A Step Forward in China’s Derivatives Market

(Bloomberg) China’s nascent financial derivatives market has taken a further step forward with today’s launch of stock options trading in Shanghai. For the first time, investors will be able to trade options on the Shanghai Stock Exchange 50 A-Share Index (SSE50) exchange-traded fund, offering investors new investment vehicles for diversification and hedging against risk.

The introduction of stock options represents a significant development in China’s capital markets and a move toward greater financial reform and market liberalization. Today’s launch follows the introduction of futures trading and short selling in China, which laid a foundation for stock options trading.

For this new hedging tool to positively contribute to a more robust equity market, liquidity will be an imperative factor. Market participants, including investors and market makers, will need powerful tools to analyze volatility, evaluate strategies, monitor their positions and risk sensitivities.

For decades, finance professionals worldwide have used Bloomberg for equity derivatives and benefited from our proven tools and market experience. Data and information on the Bloomberg Professional service enhances market transparency, providing investors insight into the global options markets. Our market-leading analytics help finance professionals pinpoint arbitrage opportunities and develop options strategies so they can hedge against or take advantage of market volatility.

In the past months, we have conducted educational seminars on the China’s derivatives market and shared best practices, as asset management firms, brokerages and securities houses seek to equip themselves with the necessary knowledge and tools required for stock options trading.

So what’s next?

China has been a hotbed for international investment and as it continues its financial reform journey, global investors will be looking at opportunities to participate, and to seek new ways to hedge risk in one of the world’s most exciting stock markets. As the market continues its push and roll-out of more derivatives products, I will continue to support the investment community and extend Bloomberg’s role in advancing global financial markets and engaging China with the world.