Ping An to trade stock index futures

Ping An Insurance (Group) Company of China has become the first insurance company on the Chinese mainland to trade stock index futures, according to the company's website Wednesday.

The announcement said that Shanghai-based Ping An Asset Management Co, a wholly owned subsidiary of Ping An Insurance (Group) Company of China, has secured a license from the China Insurance Regulatory Commission (CIRC) to act as a trustee in making stock index futures trades.

The announcement also said another of the group's subsidiaries, Ping An Life Insurance Co, has received a license this week to conduct stock index futures trades.

This means the latter subsidiary can place such trades via the former subsidiary, making Ping An the first insurance company licensed to trade in stock index futures.

"Ping An gaining permission to run a stock index futures business also indicates more insurers will be allowed in the future to hedge risks through investment in stock index futures contracts," Sun Yonggang, an analyst from Everbright Futures Co, told the Global Times Thursday.

The reason Ping An became the first insurance company to conduct the stock index futures business is mainly due to Ping An's strong financial background and experienced staff, Sun explained to the Global Times.

CIRC released rules in October 2012 to guide the involvement of insurance funds in the stock index futures market. Insurance funds are to be limited to hedging risk, with speculative activities forbidden.

Insurance companies involved in the stock index business will be obliged to install systematic safeguards to control risk and make sure stock trading volumes remain within preset safe levels.

"The market will not be impacted too much because of insurance funds' entering into stock index futures. Insurance companies need tools to hedge against the risks from the stock market," Geng Jialei, an index futures analyst at Xinhu Futures, told the Global Times Thursday.

As a result of improvements in China's market index system and financial market innovation, the government is making efforts to gradually open stock index futures to more financial institutes, Geng said.

So far, securities brokerage firms, mutual funds, QFII and insurance firms have been approved to participate in stock index futures trading.