Stock index futures trading begins

Stock index futures are one of the most popular trading platforms in the world. But it's still a new concept in China's equities market, as many investors are still not familiar with its trading rules. Experts have warned that potential investors should understand index futures before putting money into it.

China's stock index contracts will take the CSI 300, an index of 300 large-cap shares in the Shanghai and Shenzhen exchanges, as the trading target. The value of the futures contracts are points of the CSI 300 multiplied by 300 yuan. So if the index rises 100 points, previous buyers can earn 30 thousand yuan for a single contract, while previous sellers loose 30 thousand yuan.

Investors must pay cash deposits equivalent to 15 percent of the contract's value for agreements made in May and June, and 18 percent for longer-term deals.

The exchange set a base price at 3399 for all four contracts, slightly above Thursday's close. Analysts say the base price is in the recent range of the CSI-300 index.

Zhou Lei, Assistang GM, Galaxy Futures Company, said, "The stock index futures is a double-edge sword. It's a tool for avoiding risks. It also has leveraging functions, which can magnify your gains as well as your losses."

The contract price will be permitted to rise or fall as much as 10 percent in one session. Experts suggest that investors should properly control capital and pay attention to potential risks.