Their efforts are mainly focused on the reinforcement of risk control capability, education of investors and recruitment of specialists in financial derivatives.

More so than stock trading, the index futures market must set a stricter requirement on the risk control capability of investors, who either need to arbitrage through short selling or hedge against market risks.

Futures brokerage companies are required to play a pivotal role in monitoring market risks and enhancing investors' awareness of the risks involved. Because of the highly leveraged nature of the market, there are much higher risks as a small movement in the index will be magnified many times.

Timely adjustments of margin levels are seen by brokers as a major tool in risk control, according to China International Futures (Shanghai) Co Ltd (CIFCO). This mechanism is now subject to thorough testing in the ongoing simulated trading of the Shanghai & Shenzhen 300 stock index futures, which started two months ago. CIFCO (Shanghai) has set a band of between 10 percent and 30 percent in margin movement to better monitor and control market risk.

In addition, CIFCO (Shanghai) and some other broking companies are publishing regular journals to keep potential investors informed of developments. These journals also carry articles, including case studies on investment in commodities futures, to educate potential investors of the benefits and risks of trading in index futures and other financial derivatives.

"Futures brokerage companies have gained rich experience in risk control from trading in commodity futures for more than 10 years," said Lin Hui, an analyst with CIFCO (Shanghai). "We are confident we can provide investors with helpful investment strategies," Lin said.

As a brand new financial derivatives product on the mainland, it will take much time and effort to educate potential investors on the market mechanism, experts said. For that reason, the exchange and many brokerage firms are putting a premium on investors' education. Basic knowledge and risk awareness are the two major parts of the education, the experts said.

(For more biz stories, please visit Industry Updates)