Securities Markets in China

1
Securities Markets in China

• Prof. Stephen Y. L. Cheung
• Department of Economics Finance
• City University of Hong Kong

2
Country Profile (I) National Flag
3
Country Profile (II) Brief History

• one of the worlds great seminal civilizations
• culture and forms of social organization
  developed by Han people in Yellow River basin
  more than 4,000 years ago
• in 1911, the reign of emperors ended with
  establishment of the Chinese Republic

4
Country Profile (III) Brief History

• in 1949, Communist Party under leadership of Mao
  Tse Dong founded Peoples Republic of China (PRC)
• political movements through 1950s to early 1970s
  e.g. Great Leap Forward, the Cultural Revolution
• economic growth was slow

5
Country Profile (IV) Brief History

• Deng Xiao Ping came to power and introduced a
  number of economic liberalization programmes
• No matter whether it is a black cat or a white
  black, it is a good cat as long as it catches
  mice.
• reform in agricultural sector
• open-door policy to foreign investors
• special economic zones
• rapid economic growth which led to overheating
  and social unrest

6
Country Profile (V) Brief History

• in 1993, introduced austerity measures to curb
  inflation which dampened economic activities
• maintained stability of Renminbi after Asian
  currency crisis in 1997 and economic slowdown
  prompted pump-priming measures to boost domestic
  demand

7
Country Profile (VI) Brief History

• growth due to
• modernization programmes
• open-door policy
• changed incentive system towards market-oriented
  economy

8
Country Profile (VII) Political Structure

• official name Peoples Republic of China
• form of place 1-party rule by Chinese Communist
  Party
• executive 15-member State Council elected by
  National Peoples Congress
• head of place president (elected for two
  consecutive 5 years by NPC)
• legislature Unicameral National Peoples
  Congress, 2,970 delegates
• local government 22 provinces, four special
  municipalities and five autonomous regions
• central government Politburo of Chinese
  Communist Party
• president Jiang Zemin
• central bank governor Dai Xianglong
• source EIU, Country Report China 3rd quarter
  1998

9
Country Profile (VIII) Economic Structure

• 1996 1997 1998
• GDP (Rmb b) 6,936.6 7,607.7 7.955.4
• real GDP growth () 9.7 8.8 7.8
• inflation rate () 8.3 2.8 -0.8
• population (m) 1,218 1,230 1,242.38
• exports (USb) 151.1 182.7 183.4
• imports (USb) 131.5 136.4 134.6
• c/a balance (USb) 7.2 29.7 29.5
• external debt (USb) 139.3 159.2 165.3
• source EIU, Country Report China 4th quarter
  1999

10
Country Profile (IX) Origins of GDP 1997

• agriculture, forestry and fishing 18.7
• industry 49.2
• services 32.1

11
Country Profile (X) Components of GDP 1997

• private consumption 47.5
• public consumption 11.4
• gross fixed investment 33.8
• exports of goods and services 24.5
• imports of goods and services -20.9

12
Country Profile (XI) Main Destinations of
Exports 1997

• Hong Kong 21.1
• US 20.7
• Japan 14.5
• South Korea 3.4
• Germany 4.0
• Netherlands 2.8
• Singapore 2.1
• Taiwan 2.1

13
Country Profile (XII) Country Risk

• marks weighting
• political risk 15.32 25.00
• economic performance 9.46 25.00
• debt indicators 9.70 10.00
• debt in default or rescheduled 8.36 10.00
• credit ratings 6.04 10.00
• access to bank finance 0.06 5.00
• access to short-term finance 2.32 5.00
• access to capital market 2.80 5.00
• discount on forfeiting 2.45 5.00
• total score 56.51 100.00
• Ranking Among World (Sept 98) 42
• Ranking Among World (Mar 99) 45
• source Euromoney, March 99

14
Securities Regulatory Framework (I)
15
Securities Regulatory Framework (II)

• State Council Policy Committee established in
  1992 to set broad policy guidelines
• China Securities Regulatory Commission
  established in 1992 to regulate stock exchanges
  in China and be responsible for examination and
  approval of accountants qualifications to engage
  in accounting business related to securities

16
Securities Regulatory Framework (III)

• POBC responsible for examination and
  authorization of securities institutions and
  issue of debt securities of financial
  institutions and investment trust companies
• Shanghai/Shenzhen Securities Regulatory Offices
  are executive regulatory body of respective
  markets at local level

17
Securities Regulatory Framework (IV) Main
Securities Statutes

• Company Law,. 1993
• the Decree of the Standing Committee of the
  National Peoples Congress on the infringement of
  the Company Law, 1995
• Interim Rules on the Issuance and Trading of
  Equities, 1993
• Rules on Corporate Bonds, 1993
• Rules of the State Council on the Local Listings
  of Foreign Currency Denominated Shares, 1995

18
Securities Regulatory Framework (V) Main
Securities Statutes

• Rules on the Management of Stock Exchanges, 1996
• Interim Rules on the Prevention of Securities
  Fraud, 1993
• Interim Rules on the Qualification of Securities
  Professionals, 1995

19
China Securities Regulatory Commission (I)

• established in 1992 and issued a number of
  national level rules
• in 1995 assumed responsibility for regulation of
  commodity futures sector

20
China Securities Regulatory Commission (II)
Functions

• responsible for drafting laws and regulations for
  securities markets
• study and set policies and guidelines for
  securities markets
• establish plans for market development
• lead, co-ordinate, oversee and investigate work
  of localities and national departments in
  relation to securities markets

21
List of Exchanges (I)

• Shanghai Stock Exchange
• Shenzhen Stock Exchange
• Wuhan Securities Exchange Centre

22
List of Exchanges (II)

• Shenzhen Mercantile Exchange
• Shanghai Cereals and Oils Exchange Ltd.
• Shanghai Metal Exchange
• China-Commodity Futures Exchange, Inc. of Hainan
• China Zhengzhou Commodity Exchange
• Beijing Commodity Exchange Ltd.
• Guangdong United Futures Exchange

23
Stock Market Overview (I) Summary Statistics

• Shanghai Stock Exchange 1997 1998 1999
• market capitalization (Rmbb) 921.81 1,062.59 1,4
  58.05
• market turnover (Rmbb) 1,376.31 294.75 424.97
• of companies listed 383 438 484
• market P/E () NA 32.95 37.12
• A-shares NA 34.36 38.15
• B-shares NA 6.04 10.04
• Shanghai Composite Index 1,181.1 1,146.7 1,366.58
  
• Shanghai B-share Index NA 28.71 37.91

24
Stock Market Overview (II) Number of Listed
Securities in 1997

• Shanghai Stock Exchange
• A-shares 372
• B-shares 50
• funds 15
• Treasury bonds
• spot 9
• repo 8
• others 7
• source Almanac of Chinas Finance and Banking
  1998

25
Stock Market Overview (III) Top 10 Stocks in
1999 (Market capitalization US)

• Changhong Elec 1,270.56m
• Pudong Development Bank 1,216.08m
• Vaccum Electron 782.55m
• Shenhua Industrial 736.61m
• Founder Yanzhong 673.99m
• Jiansu Zongyi 653.86m
• Tsinghua Tongfang 595.53m
• Hongqiao Airport 589.73m
• Qingdao Hairer 557.63m
• Shanghai Automotive 532.64m
• source Infobank, www.chinainfobank.com

26
Stock Market Overview (IV) Summary Statistics

• Shenzhen Stock Exchange 1997 1998 1999
• market capitalization (Rmbb) 831.12 887.90 1,189.
  07
• market turnover (Rmbb) 1,695.87 279.82 396.43
• of companies listed 362 413 463
• market P/E () 41.14 30.59 36.3
• A-shares NA 32.31 37.56
• B-shares NA 5.71 10.38
• Shenzhen Composite Index 381.29 343.85 402.18
• Shenzhen B-share Index NA 53.58 84.66
• source Shenzhen stock Exchange, www.sse.org.cn

27
Stock Market Overview (V) Number of Listed
Securities in 1999

• Shenzhen Stock Exchange
• A-shares 450
• B-shares 54
• funds 16
• corporate bonds 3
• spot Treasury bonds 15
• repurchase Treasury bonds 2
• source Shenzhen Stock Exchange

28
Stock Market Overview (VI) Top 10 Stocks by
Market Capitalisation (US) in 1999

• Shenzhen Development Bank 2,370.03m
• Dongfang Elect. 1,519.26m
• ZhongGuancun 963.26m
• China Vanke 714.17m
• Shenzhen Kondarl 677.65m
• Shenzhen Kaifa 653.23m
• Searainbow Holding 636.11m
• Citic Guoan 535.08m
• Zhuzhou Torch 503.65m
• Shenyang Environmental 500.16m
• source Infobank, www.chinainfobank.com

29
Stock Market Overview (VII) Structure of Paid-Up
Capital in 1996

• Shanghai (m) Shenzhen (m)
• negotiable A-shares 14,132.23 12,712.25
• B-shares 4,542.77 3,212.39
• H-shares 6,984.18 1,403.53
• non-negotiable state 28,355.62 14,446.19
• legal person 19,373.08 14,351.
  61
• other 1,500.21 1,156.60
• Source Fundamental Analysis of Chinese Listed
  Companies 1997

30
Performance of Equity Fund - China
31
Stock Markets in China (I) History

• foreign securities houses in 1869 and Chinese
  securities dealers appeared in 1880
• Stock Association of Shanghai established in 1891
• issue of bonds in 1894
• Commercial Association of Stocks established in
  1914 in Shanghai
• Shanghai market opened officially in 1920 , which
  mainly dealt with government bonds thereafter
  stock markets established in Beijing, Tianjin,
  Guangzhou, Nanjing, Suzhou, Ningpo

32
Stock Markets in China (II) History

• all stock markets were closed when Communist
  Party came into power in 1949
• in couple with open-door policy, Third Plenary
  Session of 11th Central Committee of Communist
  Party of China got idea of reestablishing
  securities markets in 1978
• revised securities markets with issue of state
  Treasury bills in 1981
• local enterprise bonds followed suit in 1982

33
Stock Markets in China (III) History

• state-owned financial enterprises issued
  financial bonds and development of primary share
  market began in 1984
• state enterprise corporate bonds issued and PBOC
  initiated and authorized over-the-counter market
  for secondary trading in Shanghai in 1986
• developed market for trading state Treasury bills
  in Shanghai and Wuhan in 1988
• Stock Exchange Executive established to formulate
  development of a national stock exchange in 1989

34
Stock Markets in China (IV) History

• Securities Trading Automated Quotation System
  (STAQ) commenced operations in 1990
• Shanghai Stock Exchange opened in 1990 and
  Shenzhen Stock Exchange opened in 1991
• B shares first listed and traded in 1992
• National Electronic Trading System (NET) started
  operations and H shares issued in Hong Kong, and
  N shares listed in New York as American
  Depositary Receipts (ADRs) in 1993

35
Categories of Shares (I)

• shares held by state
• nation
• state enterprises which own company
• shares held by legal person
• companies, unit or communities

36
Categories of Shares (II)

• shares held by individual
• employees
• other individual investors
• shares held by non-residents
• B shares issued in China
• H shares issued in Hong Kong
• N shares issued in New York
• S shares issued in Singapore

37
Shanghai Stock Exchange (I) History

• found on 26 November 1990 in a former hotel near
  the waterfront of Huang Pu and began operations
  on 19 December 1990
• first securities exchange since 1949
• non-profit making legal entity with membership
  system

38
Shanghai Stock Exchange (II) History

• moved to Pudong in 1996 with 8 trading floors and
  3,700 seats, each equipped with computer terminal
• there are 23 exchange centres in different
  provinces of China linked to trading system

39
Shanghai Stock Exchange (III) Organization
Structure
Members General Meeting
Board of Directors
President
Supervisory Committee
Various Departments
40
Shanghai Stock Exchange (IV) Organisation
Structure

• members annual meeting with ultimate authority
• 13-member board of directors with 9 members and 4
  non-members
• in August 1997, SHSE was placed under direct
  administration of CSRC, which will appoint
  president and vice president of SHSE as well as
  chairman and vice-Chairman of board of directors

41
SHSE (V) Membership (1995)

• local and non-local total members
• local and non-local floor trading members
• special seats for B shares foreign securities
  firms only
• seats and trading centres

42
SHSE (VI) Requirement for Membership

• financial institutions undertaking securities
  industry with authorization granted by PBOC
• minimum share capital of Rmb 5m
• securities trading for at least 2 years and show
  profit during period
• organization structure and staff complied with
  PBOC conditions
• membership seat of at least Rmb 0.6m
• brokerage share capital of Rmb 5m
• brokerage dealership share capital of Rmb 10m

43
SHSE (VII) Membership

• foreign securities firms
• authorized by PBOC
• solicit orders for B shares
• execute through local exchange members
• share commission with local members

44
SHSE (VIII) Membership in 1995

• total membership
• Shanghai-based 49
• non- Shanghai-based 504
• number of seats
• Shanghai-based 1,465
• non- Shanghai-based 2,082
• special seat for B shares 37
• trading centres 24
• source Investment Strategies in Shanghai, 1997

45
SHSE (IX) Official Trading Hours

• Monday to Friday
• morning session 930 - 1130
• afternoon session 1300 - 1500

46
SHSE (X) Address

• Shanghai Stock Exchange
• 528 Pudong Road South
• Shanghai 200120
• PRC

47
SHSE (XI) Main Indices

• China Index (all stocks in SHSE and SZSE)
• Shanghai Securities Exchange Index (base value of
  100 on 19 December 1990)

48
SHSE (XII) Securities Traded

• stocks
• Treasury bonds
• financial bonds
• corporate bonds
• mutual funds

49
SHSE (XIII) Trading System

• centralized marketplace with trading floor
• order-driven and no market makers
• scripless and computerized auto matching
• continuous trading
• price and time priority
• allow for block, auction and tender orders
• real-time quotations and information transmitted
  to market

50
SHSE (XIV) Trading System

• no short selling
• no stock borrowing or lending
• no margin trading

51
SHSE (XV) Quotation Rules

• A shares
• Rmb yuan-denominated
• broad lot 1,000 shares (RMB 1,000)
• spread
• P lt Rmb 100 Rmb 0.10
• Rmb 100 lt P lt Rmb 200 Rmb 0.20
• Rmb 200 lt P lt Rmb 300 Rmb 0.30
• Rmb 300 lt P lt Rmb 400 Rmb 0.50
• P gt Rmb 400 Rmb 1.00

52
SHSE (XVI) Quotation Rules

• B shares
• US-denominated
• broad lot 100 shares (Rmb 1,000)
• spread US0.002

53
SHSE (XVII) Settling and Clearing

• central clearing through exchanges wholly owned
  subsidiary Shanghai Securities Clearing
  Registration Company
• established in 1993
• clearing member
• local brokers
• foreign agents
• custodian banks
• Market Development Fund and Risk Fund
• book entry system and scripless

54
SHSE (XVIII) Settling and Clearing

• A shares
• T1
• custodial service in Clearing Company
• net settlement
• B shares
• T3
• custodial service in custodian banks or brokers
• continuous net settlement

55
SHSE (XIX) Settling and Clearing

• clearing fee
• A shares 0.05
• B shares US8 per deal with custodian banks and
  US4 with non-custodian banks

56
SHSE (XX) Brokerage and Fees

• account opening US85 (B shares)
• commission (SHSE takes 0.015)
• 0.4 for A shares
• 0.6 for B shares
• 0.3 stamp duty
• 0.3 transaction levy
• 0.1 registration fee
• depository fee US20
• remittance US8 inward and US10 outward

57
SHSE (XXI) Taxation and Regulation Affecting
Foreign Investors

• income tax on dividends exceeding time deposit
  rate with same maturity at 20
• no capital gain tax
• must open a B share account in custodian banks
• US-denominated without difficulty of repatriation

58
SHSE (XXII) Investor Protection

• listing with approval from CSRC

59
Shenzhen Stock Exchange (I) History

• started operations on 1 December 1990 and
  officially opened in July 1991
• non-profit and self-regulatory legal entity with
  membership system, which located in Pearl River
  Delta

60
Shenzhen Stock Exchange (II) Organisation
Structure
61
SZSE (III) Membership (1995)

• local and non-local total members
• local and non-local floor trading members
• special seats for B shares foreign securities
  firms only

62
SZSE (IV) Requirement for Membership

• financial institutions undertaking securities
  industry with authorization granted by PBOC
• minimum share capital of Rmb 5m
• securities trading for at least 2 years and show
  profit during period
• abidance by all regulations and rules of Exchange
  and payment of membership seat fee of Rmb 0.6m
• additional requirement for floor seat
• floor fee of Rmb 0.6m
• risk and clearing funds of Rmb 0.5m
• obtain a floor seat and an account

63
SZSE (V) Membership

• foreign securities firms
• authorized by PBOC
• solicit orders for B shares
• execute through local exchange members
• share commission with local members

64
SZSE (VI) Membership in 1996

• total membership
• Shenzhen-based 34
• non-Shenzhen-based 508
• floor trading membership
• Shenzhen-based 30
• non-Shenzhen-based 406
• number of seats
• Shenzhen-based 234
• non-Shenzhen-based 789
• foreign 62
• special seat for B shares 43
• linked trading centres 27
• source Investment Strategies in Shanghai, 1997

65
SZSE (VII) Official Trading Hours

• Monday to Friday
• morning session 930 - 1130
• afternoon session 1300 - 1500

66
SZSE (VIII) Address

• Shenzhen Stock Exchange
• 203 Shangbu Industrial Area
• Shenzhen 518028
• PRC
• web site
• http//web.cninfo.com.cn/eng/szse/szse.html

67
SZSE (IX) Main Indices

• Shenzhen Stock Price Index
• Shenzhen Stock Exchange A Share Index
• Shenzhen Stock Exchange B Share Index

68
SZSE (X) Securities Traded

• stocks
• Treasury bonds
• convertible corporate bonds
• mutual funds

69
SZSE (XI) Trading System

• centralized marketplace with trading floor
• order-driven and no market makers
• computerized auto matching
• continuous trading
• price and time priority
• real-time quotations and information transmitted
  to market

70
SZSE (XII) Trading System

• no short selling
• no stock borrowing or lending
• no margin trading

71
SZSE (XIII) Quotation Rules

• A shares
• Rmb yuan-denominated
• broad lot 100 shares
• spread Rmb 0.05

72
SZSE (XIV) Quotation Rules

• B shares
• cross trading through authorized brokers
• minimum 50,000 shares
• limit 20 spreads higher or lower than previous
  high, low or closing price
• HK-denominated
• broad lot 100 shares
• spread HK0.10

73
SZSE (XV) Settling and Clearing

• central clearing through exchanges wholly owned
  subsidiary Shenzhen Securities Central Clearing
  Company
• established in 1995
• book entry system and scripless
• three subsystems
• central registration
• central depository
• central clearing

74
SZSE (XVI) Settling and Clearing

• A shares
• T1
• central depository
• net settlement
• central clearing and scattered registry
• participants
• SSCC
• registrars
• brokers

75
SZSE (XVII) Settling and Clearing

• B shares
• T3
• central clearing and depository through custodian
  banks and brokers
• continuous net settlement

76
SZSE (XVIII) Settling and Clearing

• procedures
• T1 clearing bank prematches trade and inform
  brokers and custodians of mismatches
• T2 brokers and custodians cover share and cash
  position
• T3 matched trades settled via book entry at
  clearing bank and transfer to corresponding
  accounts
• T4 purchases not completed on T3 may be settled

77
SZSE (XIX) Settling and Clearing

• clearing fee
• A shares 0.05
• B shares max(0.05, HK500)

78
SZSE (XX) Brokerage and Fees

• accounting opening HK580 (B shares)
• commission (SHSE takes 0.015)
• 0.35 for A shares
• 0.43 for B shares
• 0.3 stamp duty
• 0.3 transaction levy
• remittance HK35 outward to Hong Kong and HK150
  to outside Hong Kong

79
SZSE (XXI) Taxation and Regulation Affecting
Foreign Investors

• income tax on dividends exceeding time deposit
  rate with same maturity at 20
• no capital gain tax
• must open a B share account in custodian banks
• US-denominated without difficulty of repatriation

80
SZSE (XXII) Investor Protection

• measures for information disclosure
• listing with approval from CSRC

81
Listing of A Shares Procedures

• assets and finances checked by organization
  authorized by CSRC
• present application for approval by local
  regional authorities
• approved applications re-examined by CSRC
• Listing Committee of Exchange examines, approves
  and reports to CSRC
• if CSRC has no objection, issue takes place 15
  days after receiving Exchange Report

82
Listing of A Shares National Requirements

• conform with national industrial policy
• issue shares of same class with equal rights
• promoters with no commitment on illegal acts
  within last 3 years subscribe for at least 35 of
  shares issued, amounting to Rmb 30m
• at least 25 of shares issued to public and not
  more than 10 to company staff if capitalization
  exceeds Rmb 4b, proportion held by public may be
  less with minimum of at least 10

83
Listing of B Shares Procedures (I)

• approval by Securities Policy Committee and if
  issue exceeds US40m, approved by State Council
• acquired
• foreign natural or legal persons
• Hong Kong, Macau and Taiwan natural or legal
  persons
• Chinese nationals resident abroad
• other authorized investors

84
Listing of B Shares Procedures (II)

• denominated in Rmb but subscribed and traded in
  foreign currency
• rights of A and B shareholders are same except
  for dividends
• dividends are computed in renminbi but paid in
  foreign currency
• company establishes a foreign currency account
  with domestic bank for paying dividends

85
Listing of B Shares National Requirements

• comply with national regulations relating to
  fixed asset investment and with national policies
• limited company established by B-share issuance
• at least 35 of shares subscribed by promoters,
  not less than Rmb 1.5m
• at least 25 of shares issued to public (15 if
  issue over Rmb 400m)
• issuer and promoters may not conduct illegal
  activities in last 3 years
• issuers and promoters have been profit-making for
  past 3 years

86
Reporting Requirement of Listed Companies

• Shenzhen is stricter than Shanghai
• publish financial statements twice a year and
  audited annual report within 3 months of period
  end
• disclosure of information
• mergers and acquisitions
• significant events

87
Comparison Between A and B Shares (I)

• similarities A Share B Share
• rights (vote, buy or ? ?
• transfer shares)
• obligations ? ?
• listing SHSE, SZSE SHSE, SZSE

88
Comparison Between A and B Shares (II)

• differences A Share B Share
• currency-denominated Rmb foreign
• listing requirement see above see above
• investors local Chinese non-local- nationals Chi
  n. nationals
• offerings public/private private tho offshore
• brokerage firms local authorized local
• or foreign
• trading volume high low
• volatility high low
• settlement T1 T3

89
Over-the-Counter Market

• Wuhan Securities Exchange Centre
• only one approved by CSRC
• 25-strong council
• morning session 930-1130
• afternoon session 1300 - 1500
• bonds, bond futures, funds
• OTC shares (turnover in 1996 7,916.8m)
• enter orders through in 3 trading halls with T1
  through net settlement

90
Other Related Institutions

• China Securities Association
• association of persons involved in securities
  industry
• securities trading centres
• many centres exist in major cities mainly for
  trading of bonds and funds except Wuhan
  Securities Exchange Centre

91
Debt Market (I) Overview

• first government bonds in 1980, state enterprises
  bonds in 1981 and state financial organizations
  in 1984 (government bonds dominate)
• NETS and STAQ
• central depository for all government bond issues
  in 1995

92
Debt Market (II) Instruments

• short-term instruments
• Treasury bills and bonds
• Treasury bills and bonds
• up to 10 years
• financial bonds
• corporate bonds
• overseas bond issues

93
Debt Market (III) Summary Statistics

• issue - (RMBb) 1995 1996 1997
• Treasury bills 1,510.8 2,126.2 2,412.0
• Treasury bonds (turnover)
• Shanghai spot 764.4 4,962.4 3,468.4
• repo 1,171.6 12,439.2 11,912
  .2
• Shenzhen spot 28.2 66.9 114.4
• repo 76.9 569.5 963.9
• financial bonds 853.9 1,041.0 NA
• corporate bonds 45.3 62.2 NA
• short term instruments 170.9 120.6 NA
• source Almanac of Chinas Finance and Banking
  1997, The PBOC Quarterly Statistical Bulletin,
  1998-2

94
Debt Market (IV) Summary Statistics

• (USb) 1995 1996 1997
• Euro-bonds issues 541.0 1,570.0 4,231.1
• foreign bond issues 1,831.9 2,616.3 1,100.0
• syndicated Euro-loans 4,226.1 3,626.8 5,354.6
• syndicated foreign loans - 9.9 10.0
• other debt facilities 150.0 12.0 -
• source OECD, Financial Statistics Monthly,
  various issues

95
Derivatives Markets

• commodity futures and some debt futures but
  exchange-traded debt futures in SHSE and SZSE has
  been suspended (gambling)
• in 1996, SCSPC and CSRC jointly issued 6-point
  directive banning banks, stockbrokers and trust
  and investment companies from trading futures
• limited equity-related derivatives

96
Conclusion

• developing regulation and securities markets
• active stock market
• active government bonds and overseas issues
• active in commodity futures but weak in financial
  derivatives products