Another story about China being interested in the corporate bond and derivative market:
SHENZHEN, Dec. 2 (Xinhua) -- China will gradually develop corporate bonds and financial derivatives to provide investors with effective risk management tools, Shang Fulin, chairman of China Securities Regulatory Commission (CSRC), said on Sunday.
The CSRC will continue to boost the ratio and scale of investment in capital markets by the insurance, annuity, and social security funds, Shang told a forum held in southeastern Chinese city of Shenzhen.
He called on institutional investors to explore new, effective ways to educate individual investors of risks involved in buying securities.
As noble as efforts are to control risk and gambling in the Chinese markets, in reality they will have little impact. Derivatives are inherently risky products, with the potential for wild swings, and no amount of “delayed introduction” talk is going to stop them from become a massively volatile market force once retail investors get their hands on them.
The same case was true for equities. In fact, the longer China puts off the introduction of derivatives, the more dramatic the effect they may have. Educating investors about the risks is also possibly redundant, for the more they know about the risks, the more they know about the potential returns.