After China's entry into WTO, China's economic strength has been continuously enhanced, which provides an opportunity for the development of the stock index futures market. Coupled with the continuous progress of national laws and regulations, the development of stock index futures will be more conducive to improving the structure of China's capital market. Judging from the market situation, the China stock market has begun to take shape. As of August 17, 2009, the total market value of China's stocks has fallen below 20 trillion, forming a group of professional futures managers and investors. Developed spot market, talents and experience are the guarantee of stock index futures market.
Judging from the institutional conditions, China's futures industry has formed a two-level supervision model of China Securities Regulatory Commission and Futures Exchange, and promulgated the Securities Law and the Interim Regulations on the Management of Futures Trading, which will promote the normal operation of stock index futures trading on the road of legalization and standardization.
Technically, China has a developed Internet, a powerful electronic trading platform and an advanced, efficient, perfect and unified settlement system.
From the point of view of the significance to the capital market, the development of the stock market provides the possibility for the stock index futures market, which will promote the positive and healthy development of stock spot market transactions. By attracting a large number of arbitrageurs and hedgers and improving the scale and liquidity of the stock market, the interaction between the two markets will better promote the development of China's financial industry. This is reflected in: avoiding systemic risks and protecting the interests of investors; Enriching investment tools is conducive to stimulating the creativity of investment institutions; Improve market liquidity; Improve the functional system and enhance the international competitiveness of China securities market. However, it is obviously not feasible for individual investors to avoid risks through stock index futures, and it needs to be realized through professionals and intermediaries.
In its own sense, stock index futures have the characteristics of high transparency, leverage effect and large market liquidity. Hedging with stock index futures has a stable effect on the stock market, which is reflected in ensuring the balance between supply and demand, asset allocation function, improving the transaction efficiency of buyers and sellers, risk management and transfer function. It can be seen that it is necessary for China to implement stock index futures and gradually build a stock market hedging mechanism through its application in the wealth management market.
Theoretically, it is progressive to use stock index futures as a hedging tool for stock investment. However, because the funds of small and medium investors are not enough to buy stock index futures to preserve the stock portfolio, and because of the complexity of its operation, it is difficult for small and medium investors to benefit from stock index futures, and the stock index futures itself has the problem of high leverage, which makes the stock index futures unable to be recognized by the vast majority of investors. We suggest that a wealth management product combining stock index futures and stock spot can be effectively constructed by combining the theory of portfolio and stock index futures hedging to avoid risks and using the real data simulating the Shanghai and Shenzhen 300 index and stock spot portfolio, so as to enrich the market of wealth management products in China through this product.
Because of the high cost of stock index futures, it is difficult for small and medium investors to effectively use it to avoid risks. Therefore, as a bridge, intermediaries can finance small and medium-sized investors and buy stock index futures in the spot market to hedge, which not only solves the problem of systemic risks, but also increases investors' confidence in returns. At the same time, the expansion of financing channels has enlivened the market economy and further improved the capital market structure. All these are inseparable from the participation of individual and collective investors, and hedging research is a new opportunity to open up financial markets.
As an effective hedging tool in the capital market, stock index futures should be highly valued. It not only encourages intermediary institutions to invest, provides diversified products for professional institutions, but also gives small and medium investors an investment confidence, thus promoting the development of personal financial services. Financial innovation has a great contribution to a country's economic growth and wealth accumulation, so the introduction of stock index futures will surely become a breakthrough in the development of financial derivatives market. Under the background of domestic demand, China should launch its own stock index futures as soon as possible, and China has basically met the conditions for launching stock index futures. The functions of price discovery, hedging, speculation and asset allocation of stock index futures will have a positive and significant impact on the development and structural adjustment of China's financial market.
Of course, stock index futures trading, like other financial derivatives, has the nature of "double-edged sword", which brings convenience to people and great risks. Therefore, before the introduction of stock index futures trading, we must first study and formulate strict and feasible measures to control trading risks. On the other hand, establish a special personal credit rating department or institution to strictly review the qualifications of financial planners to ensure that the rights and interests of investors are protected.
The development of China's investment and wealth management market depends on the efforts of all walks of life in China. Using the hedging function of stock index futures, we can reduce investment risks for small and medium-sized investors and correctly establish risk awareness. For example, personal investment and financial management should make short-term and long-term plans, build investment portfolios, and improve the ability to maintain and increase assets. This will help to increase the liquidity of capital market assets and improve China's capital structure. The perfection of any institutional environment needs to go through a process of continuous exploration and progress, which can not be achieved overnight, let alone away from financial derivatives. Therefore, in view of the urgent needs of the market and the limitations of personal investment, we should actively innovate and practice, flexibly use financial derivatives, and broaden the space of financial management market.
Generally speaking, stock index futures trading has two functions: one is price discovery function, and the other is hedging function. As a kind of financial futures, stock index futures also have two functions: price discovery and hedging!