Mainland brokers shut out of own futures market turn to Singapore's China A50

Chinese brokerages ruing the collapse of futures trading in Shanghai are pitching clients similar contracts in Singapore.

"Goodbye, China Financial Futures Exchange; Hello, FTSE A50!" reads an advertisement by a unit of Shenzhen-based Essence Securities Co on the WeChat messaging service, referring to Singapore-traded futures on an index of the biggest mainland companies.

China's domestic equity futures market, ranked the world's busiest as recently as July, has seen volumes plunge 99 percent since June as policymakers curbed leverage and position sizes and announced investigations into "malicious" short sellers. That has left brokerages, which boosted staff numbers by 50 percent since 2011, turning to promoting contracts on the SGX FTSE China A50 Index as an alternative.

"Investors and hedge funds are showing great interest switching to overseas markets," Zhu Bin, deputy general manager of Hangzhou-based Nanhua Futures Co, said. "Foreign investors who have positions in mainland equities will also turn to Singapore to hedge their positions."

Volume in Singapore-listed front-month futures on the FTSE A50 gauge rose to 281,000 contracts on Monday. That was more than 10 times the number of contracts that changed hands on the CSI 300 Index.

Trading in both futures markets soared as China's benchmark stock index rallied more than 150 percent in the 12 months through the June 12 peak. The Shanghai Composite Index has since tumbled 41 percent, helping to erase $5 trillion of value on mainland bourses.

The equity measure slid 3.5 percent at the close on Tuesday, as mainland and Singapore futures declined.