China may launch a pilot programme allowing three to four brokerages to broker trades on overseas exchanges and may finalise the list of companies by as early as next month, the Economic Observer reported on Saturday. Citing an unidentified source, the paper said trading houses that may be designated under the trial were COFCO Futures Co, China International Futures Co and Nanhua Futures Co.
The paper added that the China Securities Regulatory Commission would likely impose stringent rules for the program, including the type of investors able to participate as well as limits on their overseas trading volumes. Such limitations are due to the inconvertibility of China's yuan currency.
If launched, the program would be a big boost to local brokerages as they would then be able to serve the growing demands of local enterprises for overseas hedging. The proposed program would also break the monopoly of foreign agencies by allowing domestic enterprises to hedge overseas through local brokerages.