To further improve the efficiency and functionality of the equity index futures market, China Financial Futures Exchange (CFFEX) announced the implementation of cross-product Larger-Side Margining for equity index futures, which will come into effect from the clearing session on June 03, 2019.

Under the cross-product Larger-Side Margining for equity index futures, CFFEX will collect Trading Margin aggregated across CSI 300, SSE 50, and CSI 500 index futures on only one side of positions held, i.e. the larger of the Trading Margin calculated either on the long or short side.

CFFEX has previously implemented same-product Larger-Side Margining for equity index futures and China government bond (CGB) futures from October 27, 2014; and since July 10, 2015, CFFEX has adopted cross-product Larger-Side Margining for CGB futures.

Margin requirement is a fundamental means for risk control in the futures market. Under the premise of effective market risk control, trading costs can be effectively reduced by arrangements such as Larger-Side Margining. CFFEX has maintained safe and stable operations since the implementation of Larger-Side Margining for financial futures. A CFFEX official commented that “implementing the cross-product Larger-Side Margining for equity index futures, in addition to the previous practice of same-product Larger-Side Margining, will help further reduce the cross-product operational costs and further facilitates market functioning” .

Following the implementation of this new margining arrangement, CFFEX will keep close track of market conditions to ensure the stable and orderly operation of the equity index futures market. Meanwhile, CFFEX will continue to improve market mechanisms, quality and efficiency, while maintaining a strong focus on risk prevention, so as to build a compliant, transparent, open, dynamic and resilient financial futures market.