(Yicai Global) April 17 -- The China Securities Regulatory Commission has approved the registration and trading of 30-year Chinese government bond futures on the China Financial Futures Exchange.

The first three contracts for June, September, and December will be available from April 21, according to an official document released by the CFFEX on April 14. More details, such as initial benchmark prices, will be announced later, it added.

The new futures will help national debt underwriters hedge interest rate risks, meet investor demand for risk management of bonds with ultra-long maturities, increase market liquidity for 30-year treasury bonds, and improve the treasury bond yield curve, Chen Jianheng, head of fixed-income research at China International Capital, told Yicai Global.

In addition, Chen said that the 30-year treasury bond futures can also help insurers and pension fund managers holding long-term government bonds flexibly carry out futures and spot portfolio investments and improve their risk prevention capabilities

The new futures contracts “represent a further improvement in the Chinese market in terms of management of interest rate-related risks and also China’s further integration with mature international markets,” Chen pointed out.

“Based on the existing and enriched experience of the overseas and domestic treasury bond futures markets, the CFFEX’s 30-year treasury bond futures are basically tailored like the two-year, five-year, and 10-year treasury bond futures,” Zhang Chen, deputy head of the research institute of financial derivatives at Galaxy Futures, told Yicai Global.

The 30-year treasury bond futures designed by the CFFEX are closely related to the spot treasury bond product, which will effectively play the market functions of price discovery and hedging in the futures market, Zhang noted.

The issuance of 30-year treasury bonds is stable in the primary market and has sufficient liquidity in the secondary market, said Feng Chi, deputy general manager at the fixed-income department of Pacific Asset Management, a unit of China Pacific Insurance Group. These factors have laid good foundations for the 30-year treasury bond futures’ safe and smooth operation, Feng added.

Editors: Tang Shihua, Futura Costaglione