By Hao Zhou (chinadaily.com.cn)
Updated: 2007-11-13 16:35

The China Financial Futures Exchange (CFFEX) announced the second batch of its members, including nine clearing brokers and another three trading members, according to the Securities Times.

Specifically, the nine clearing brokers are Citics Futures, Ping An Futures, Changjiang Futures, Guolian Futures, Guomin Futures, Capital Futures, Liangmao Futures, Jiuheng Futures, and Holly Futures. The three trading members are Zhongcai Futures, Xinhua Futures, and Dayue Futures.

Among the total 12 newly added members, Citics, Ping An, Changjiang, Guolian, and Guomin are backed by underwriters. However, in the first cluster of 10 members, only Guotai Junan Futures and China Galaxy Futures were linked to underwriters.

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As more and more mergers and acquisitions occur between securities companies and futures brokers, more underwriters-linked futures brokers are coming up on the CFFEX's member list, suggested insiders.

Currently, there are a total of 22 registered CFFEX members: two general clearing brokers, 14 trading and clearing brokers, and six trading members. There are no special clearing members.

Trading and clearing members, general clearing members, and special clearing members are clearing members that can conduct clearing business directly with the exchange. Trading members can engage in proprietary or brokerage business but are not allowed to do the clearing with the exchange directly.

Trading and clearing members are only eligible to trade and conduct clearing and settlement business for themselves. General clearing members can trade and conduct clearing and settlement business for themselves as well as non-clearing members who have agreement with them. And special clearing members can clear and conduct settlement for non-clearing members that have agreement with them.

According to the designed structure, trading members without clearing licenses should be at the most numerous. Obviously, the current structure is not consistent with the plan.

However, the pattern is not yet fixed, said the insider. Because only banks can become special CFFEX clearing members, a number of futures brokers, intended to apply for membership in the futures exchange, are engaged in negotiations with banks, thus the absence of special clearing members and little trading members.

The Securities Times said the Bank of Communication and the Minsheng Banking Corp Ltd have gotten oral approval from the securities watchdog and will likely become the first two special clearing members of the futures exchange.

In the meantime, Yongan Futures, Luzheng Futures, COFCO Futures, and Yide Futures, which acquired financial futures general clearing licenses last week, as well as China International Futures, applying to enter the financial futures market, are hopeful to come up as general clearing members of the CFFEX.