SHFE exec confirms new trading hours

The Shanghai Futures Exchange (SHFE), China's leading commodities bourse, will launch after-hours trading within the next one or two months, Yang Maijun, the exchange's general manager, announced Tuesday at the 10th Shanghai Derivatives Market Forum.

Specifically, after-hours trading will run from 9 pm to 2:30 am, Yang added. Currently, futures contracts for the 10 commodities trading on the exchange - including gold, silver, copper and aluminum - can be transacted between 9 am and 11:30 am as well as 1:30 pm and 3 pm Beijing time.

Yang's statements follow remarks made at March's Two Sessions, where he said that overnight trading would move the SHFE toward closer integration with the global market.

Gold and silver futures are likely to be first in line for overnight trade, as the SHFE issued documents on May 20 asking futures brokers to participate in technical feasibility trials on extended trading for these derivatives. The China Securities Regulatory Commission first allowed the SHFE to begin experimental overnight trading of gold and futures contracts in April.

"Pilot testing is usually the last step before regulators permit futures companies to offer new products or services," Wang Zhiping, a gold analyst from Xinhu Futures, told the Global Times, adding that his company has been running after-hours trading on gold and silver since May 20. "Everything has gone smoothly thus far, so I think an official green light is just a matter of time."

Sun Yonggang, a gold analyst from Everbright Futures Co, explained to the Global Times that extended trading on gold and silver futures is expected to be welcomed by commodities investors.

"Precious metals are highly sensitive to international news, which usually comes in between 8 pm and 11 pm Beijing time, well after domestic markets are closed. Investors frequently take steep losses overnight because of this," said Sun. "Once hours are extended, market players can quickly hedge and adjust their positions in response to developments from Europe or the US."

With time delays set to become less of a liability, Sun predicted that more individual capital holders may soon start exploring the gold and silver market. "Precious metals are still very appealing asset classes for domestic investors. Prolonged hours will probably make the SHFE stand out more as a platform for trading these metals," Sun remarked.