Regulators are mulling over a trial plan for domestic commodity futures funds. The goal is to reduce the number of retail investors on the domestic futures market, foster institutional investors on the commodity futures market, and promote stable development of the market, according to the China Securities Journal.

Relevant departments held discussion meetings in Hangzhou, capital of East China's Zhejiang Province, at the end of February, said the report. But now the futures funds plan is still in the phase of soliciting opinions and no unified frame and plan has been formed.

There are currently 19 tradable items on the futures market. The total turnover of China's commodity futures market reached 40.97 trillion yuan ($5.78 trillion) in 2007. However, most of futures investors are retail investors. For example, now over 90 percent of investors are private clients on the Dalian Commodity Exchange. The absence of institutional investors will not contribute to stable development of the market when the commodity prices fluctuate dramatically.

In fact, fostering institutional investors has become an important task for futures exchanges. Earlier this year, Yang Maijun, general manager of the Shanghai Futures Exchange, said taking gold futures as a chance to develop institutional investors is an important task this year.

As for taking which forms for the futures funds and how to develop the futures funds, experts have different opinions. Although experts make different policy suggestions, local pilot plans are a common consensus.

(Chinadaily.com.cn March 19, 2008)