(Yicai Global) Oct. 12 -- The Chinese branch of UK lender HSBC Holdings has become China's first custodian bank to have helped a qualified foreign institutional investor trade commodity futures.

HSBC Bank China yesterday assisted an overseas institution in completing a commodity future transaction for qualified foreign investors in China.

Commodity futures are derivatives of commodities and represent predictions of their future prices. Commodity futures transactions, or commodity futures contracts, are agreements to buy or sell commodity futures at a specified price. They are convenient and efficient and have low costs, so they are an ideal way of investing in commodities.

China opening its commodity futures market to QFI investors will help overseas institutions improve their trading strategies, assets allocation efficiency in the country, and risk control level, Zhong Yongling, director of HSBC Bank China's securities services department, told Yicai Global, without revealing any other detail about the transaction.

The China Securities Regulatory Commission allowed QFI investors to participate in futures and futures contract trading of 41 commodities, such as gold, silver, and low-sulfur fuel oil, from Sept. 2.

"Since China's five futures exchanges opened 23 commodities futures contracts and 18 options contracts to QFI investors on Sept. 2, dozens of overseas institutions have inquired HSBC about investing," Zhong noted.

Over 710 overseas institutions in China had become QFI investors as of August, and HSBC provides domestic custody services to 260 of them, according to the CSRC.

In February, HSBC Bank China became the first foreign custodian bank that helped a QFI investor finish transactions on the Beijing Stock Exchange. On Sept. 19, it became the first foreign custodian bank to complete stock index options trading on the China Financial Futures Exchange.

The custody settlement system is a basic framework for cross-border investment and development of the capital market, Zhong added, noting that foreign investors are deepening and widening their investments in China as the country is implementing more opening-up policies in its capital market. China will attract more high-quality foreign investors, she predicted.

Editor: Futura Costaglione