China’s first exchange-traded gold future’s option was listed on 20th December 2019 on the Shanghai Futures Exchange (SHFE). While gold options already existed in China, these were traded over-the-counter (OTC) on the OTC market platform at the Shanghai Gold Exchange (SGE) and linked to physical gold products.1 The newly listed SHFE gold option’s underlying assets are gold futures, filling a gap in the exchange-traded gold option market in China.
Current state of China’s option market
China’s option market is young. It started with the birth of the OTC options market in 2013. This is regulated by China Securities Regulatory Commission and its main participants are security brokerage firms and futures companies, as well as commercial banks. Two years later, China’s exchange-traded options market came into existence. Having developed over the last four years, there are now three stock index options and ten different commodities futures options listed at exchanges.