China options market faces margin and settlement challenges

Equity index options set for launch later this year, but China authorities expected to retain T+1 settlement system which may inhibit options trading

Margin calculation methodology and settlement rules preventing market-makers hedging underlying option exposures are the two main challenges that need to be overcome before the expected launch of equity index options in China at the end of this year, while the launch of single stock options has been suspended, say market insiders.

Index options referencing the CSI 300 and SSE 50 are expected to be among the first set of index options launched while exchange-traded fund options on SSE 50 ETF and