China re-launched trade of its Treasury bond (T-bond) futures on September 6, 18 years after banning it following a multi-billion-yuan trading scandal.

Three five-year T-bond futures contracts were traded on the Shanghai-based China Financial Futures Exchange (CFFEX), and closed higher during the first trading day.

The nation introduced T-bond futures in 1992 on the Shanghai Stock Exchange. The trading was halted in 1995 after Wanguo Securities, then the nation's largest brokerage, conducted illegal trading of a government bond futures contract, which led to multi-billion-yuan losses and the bankruptcy of the company.

CFFEX Board Chairman Zhang Shenfeng told Xinhua News Agency that the re-launch came at a time when institutional investors have greater demand for risk-hedging tools amid more frequent fluctuations of interest rates.

It marked the second financial future product on the CFFEX after the exchange launched stock index futures trading in April 2010.

China's outstanding T-bonds stand at around 7 trillion yuan ($1.14 trillion), ranking second in Asia and sixth worldwide.

Analysts said the reintroduction is part of government efforts to encourage the development of the T-bond market, offer protection against market volatility and advance interest rate reform.