China suspends publication of volatility index as regulators look to support markets
Reuters|
Feb 23, 2018, 11.34 AM IST
SHANGHAI: China has suspended publishing its volatility index following the recent stock market rout, as regulators step up efforts to curb speculative trading and shore up investor confidence.
Publication of the SSE 50 ETF Volatility Index, the Chinese version of Wall Street's so-called fear gauge VIX, was suspended on Thursday due to a technical upgrade, a representative of the publisher, China Securities Index Co (CSI), said.
There is no timetable for when the service will be resumed, she added.
The index, which was based on SSE 50 ETF option, was also taken off the official website of the Shanghai Stock Exchange, a main shareholder of CSI.
An exchange official said the bourse has increased scrutiny on those option traders who change hands frequently in an effort to curb speculation.
The officials declined to be named as they are not authorized to talk to the media.
China's blue-chip index CSI300 tumbled 12 per cent over 10 sessions from on Jan. 29, suffering heavier losses than major U.S. stock indexes, whose sudden and sharp declines triggered the global equities rout.
On Feb. 12, an affiliate of China's securities regulator encouraged major shareholders of domestically-listed firms to increase their holdings.
And the official Shanghai Securities News reported on Friday that China's five state-backed mutual funds boosted their equity holdings during the latest slump, which saw volatility levels surge to one-year high.
The reports of government backed intervention recalled memories of China's 2015 market crash and a subsequent massive state rescue, and come as more foreign investors are expected to buy into mainland stocks and bonds this year.
Although overseas investors betting against a spike in volatility via VIX-linked derivatives were wiped out during the recent turmoil, China has no volatility-based derivative products.
Nevertheless, investors have been embracing hedging instruments in the face of rising uncertainty.
The trading volume of options on 50ETF totaled 28.4 million contracts in January, more than double the 13.5 million last September.
The CSI300 index futures, which can be used by traders for risk-hedging or speculative purposes, saw its trading volume surge in recent weeks.
Publication of the SSE 50 ETF Volatility Index, the Chinese version of Wall Street's so-called fear gauge VIX, was suspended on Thursday due to a technical upgrade, a representative of the publisher, China Securities Index Co (CSI), said.
There is no timetable for when the service will be resumed, she added.
The index, which was based on SSE 50 ETF option, was also taken off the official website of the Shanghai Stock Exchange, a main shareholder of CSI.
An exchange official said the bourse has increased scrutiny on those option traders who change hands frequently in an effort to curb speculation.
The officials declined to be named as they are not authorized to talk to the media.
China's blue-chip index CSI300 tumbled 12 per cent over 10 sessions from on Jan. 29, suffering heavier losses than major U.S. stock indexes, whose sudden and sharp declines triggered the global equities rout.
On Feb. 12, an affiliate of China's securities regulator encouraged major shareholders of domestically-listed firms to increase their holdings.
And the official Shanghai Securities News reported on Friday that China's five state-backed mutual funds boosted their equity holdings during the latest slump, which saw volatility levels surge to one-year high.
The reports of government backed intervention recalled memories of China's 2015 market crash and a subsequent massive state rescue, and come as more foreign investors are expected to buy into mainland stocks and bonds this year.
Although overseas investors betting against a spike in volatility via VIX-linked derivatives were wiped out during the recent turmoil, China has no volatility-based derivative products.
Nevertheless, investors have been embracing hedging instruments in the face of rising uncertainty.
The trading volume of options on 50ETF totaled 28.4 million contracts in January, more than double the 13.5 million last September.
The CSI300 index futures, which can be used by traders for risk-hedging or speculative purposes, saw its trading volume surge in recent weeks.
