(Yicai) Feb. 12 -- Foreign participation in China’s futures market is growing quickly, partly driven by the need to hedge against global market swings, insiders said.

The number of active overseas clients trading in those futures products available to them in China jumped 17 percent last year, while their holdings surged 28 percent, according to the latest data from the China Futures Market Monitoring Center.

HGNH International Financial Corporation Limited saw the ranks of its foreign clients trading on the Shanghai futures market almost double in the 12 months, while related trading volumes soared about three times, said General Manager Jiang Linqiang.

In addition to overseas clients seeking to hedge, Jiang said, some large commodity trading companies and dealers have also ramped up their activity on the Shanghai futures market and have broadened the range of their trading targets.

Several other industry sources said foreign investors are paying more attention to Shanghai Future Exchange’s crude oil, international copper, No. 20 rubber, low-sulfur fuel oil, and container shipping index (European line) on the Shanghai Futures Exchange, as well as iron ore, palm oil, soybean oil, and soybean meal on the Dalian Commodity Exchange, and rapeseed oil on the Zhengzhou Commodity Exchange.

More and more overseas shipowners, cargo owners, and freight forwarders have stated trading the SHFE’s container shipping index (European line) futures to hedge against sharp market fluctuations, said Shi Chenghu, chief executive of brokers Bands Financial.

Luo Peng, head of institutional business at Citic Futures International, told Yicai that trading in the futures products available to foreigners allows domestic importers and exporters as well as overseas firms to manage risks.

Some of the unique regulatory mechanisms of China’s futures market have also been recognized by foreign investors, in areas such as ex-ante margins and price limits, Shi added. "These regulatory regimes can prevent extreme risks in the futures market to the greatest degree,” he noted.

Shi added that China’s futures exchanges should be guided by demand, and more international futures products should be launched to attract foreign traders.

At present, there are 24 futures products in China’s market that allow direct participation by foreign traders, along with 46 futures and options products that allow participation through the qualified foreign investors schemes.

Editors: Tang Shihua, Tom Litting