China's emerging market of over-the-counter (OTC) derivatives witnessed a surging trading volume in the first nine months of 2007, according to latest statistics of the People's Bank of China, the country's central bank.

In the yuan derivatives market, trade volume of forward contracts rose 138.2 percent over 2006 to reach 158 billion yuan (US$21 billion) from January to September. Trade volume of RMB interest rate swaps rocketed 365.3 percent over last year to 165.5 billion yuan.

In September, the central bank issued a document to allow trading of forward rate agreement (FRA) to start on November 1.

In the foreign exchange derivatives market, trade volume of RMB forex forward was about US$15 billion in the first nine months of the year, with daily trade volume rising 32.4 percent to US$82 million.

Meanwhile, daily trade volume of RMB forex swaps soared more than 11 times to reach US$1.29 billion.

China will soon allow trading of currency swaps at the interbank market, covering swaps between RMB and five foreign currencies, including US dollar, euro, Japanese Yen, Hong Kong dollar and English pound, according to sources with the central bank.