Luo Heng, a consultant from CITIC Futures, said that foreign capital is paying greater attention to the Chinese futures market. The fast-growing Chinese economy makes the "China factor" an important force driving the prices of staple commodities worldwide. In order to avoid risks, some international tycoons are starting to participate in Chinese futures trading through joint stock futures companies.

The launch of financial futures will usher in an unprecedented expansion of the Chinese futures market, which foreign investors won't ignore. Of all the global transactions of derivatives in 2006, commodities accounted for only 8 percent and financial derivatives 92 percent.

However, due to concerns over ineffective supervision, most foreign investors are still waiting.

Since January 1, 2005, China has permitted intermediaries that have registered with the Hong Kong Securities and Futures Commission and are in line with CSRC regulations to set up joint stock futures brokerage companies on the mainland. The opening of the mainland market to Hong Kong means opening to the whole world. Overseas investors can register a futures company in Hong Kong and then enter the Chinese futures market by way of forming joint stock companies, or enter the mainland futures market by acquiring a Hong Kong company.

But the fact that only two joint stock futures companies have been formed on the mainland indicates that foreign investors' worries haven't changed.

Luo said that foreign investors pay much attention to the comprehensive qualities of a potential joint-stock company, including its asset quality, operational ability, profitability, market shares and liabilities. But due to confidential restrictions derived from competition among Chinese futures companies, it is hard for foreign investors to get the information they need.

More varieties wanted

Although the Chinese futures market is developing steadily, lack of variety has withheld its further development.

Wang said that there are only 13 kinds of commodities provided by China's futures companies, including soybean, wheat, corn, cotton, copper, aluminum, rubber, fuel oil, sugar and soybean oil. Other important varieties like iron and steel, crude oil and gold haven't been launched on the market yet. Being deft in making choices from hundreds of stocks, Wang found it awkward to have such limited choice when it came to futures.

"The variety of futures trading is indeed very few," said Hu.

Hu said that China, like the United States, is a major producer, consumer and trader of such staple commodities as farm produce, energy and minerals. Take agricultural products for example. China's output of wheat, corn and soybean ranks first, second and fourth in the world respectively, while their import volume comes second worldwide. China has sufficient supply and great needs to avoid risks in its staple commodity transactions. But it lags far behind the United States in terms of the variety of commodities traded in the futures market.

The United States registers 114 kinds of commodity futures and options in 32 categories.

India, also a developing country, operates 89 kinds of commodity futures, with their annual trading volume accounting for 47 percent of the country's GDP.

"The most urgent task is to develop new varieties," said Hu.

CSRC, watchdog of the futures market, is now taking action. The newly enacted Regulations on the Management Over Futures Transactions encourages the trading of both commodity futures and options with expanding varieties, including securities, interest rate, exchange rate and other financial products and related index products.

"I hope more kinds of futures can be launched in the future so that we can have more options," said Wang.

Four futures exchanges on China's mainland Zhengzhou Commodity Exchange: Set up in 1990, it introduced standard futures trading in May 1993. At present, it mainly deals with wheat, cotton and green bean futures through a membership system with more than 200 members. Shanghai Futures Exchange: Established in December 1999, it has futures contracts underlying five commodities, including copper, aluminum, natural rubber, fuel oil and zinc. The Shanghai Futures Exchange has already become one of the three copper price-setting centers in the world. The prices of its natural rubber contracts have been gaining greater attention both at home and abroad. The listing and trading of fuel oil futures has been an onset of its exploration into energy futures. The exchange now has over 200 members, among which about 80 percent are futures brokerage firms. Thus far, it has set up more than 250 distant trading terminals nationwide. Dalian Commodity Exchange: Founded in February 1993, it currently lists futures products such as non-genetically modified soybean, genetically modified soybean, soybean meal, soybean oil, corn and malting barley. By the end of 2006, its total trade volume since establishment had reached 1.15 billion lots, with total trading value hitting 27.8 trillion yuan and total delivery amounting to 8.07 million metric tons. The exchange is now the world's second largest corn futures market. It is a member of both the U.S. Futures Industry Association and the U.K. Futures and Options Association. It has signed cooperation agreements with more than 10 overseas futures exchanges, such as the Chicago Mercantile Exchange, to share information and jointly develop new markets. China Financial Futures Exchange: Established in September 2006 in Shanghai, it is dedicated to the trade of new varieties of futures and options, as well as other financial derivatives.