Warrants are expected to be introduced this year in China, a first step toward developing equity derivative products. The Shanghai Stock Exchange recently published draft regulatory outlines to shape the market for industry comment. "This is the first official acknowledgement of equity derivatives in China," said Justin Kennedy, managing director in Asia-Pacific equity derivatives at Citigroup in Hong Kong, on the recognition of warrants, which is part of continuing market liberalization in the country.
One structured products official at a bulge bracket house who has been consulting with the SSE said he expects warrant trading to start this year. Initially these will be company-issued contracts but over time warrants issued by securities houses as in other markets could emerge. Equity professionals expect financial futures to be one of the next major steps in China, which may develop in the next year or so.
