BEIJING, March 24 (Xinhua) -- China's National Interbank Funding Center (CNIFC) on Tuesday launched interest-rate options products pegged to loan primate rates (LPRs), reported Xinhua Finance, a financial information platform run by Xinhua News Agency.
The new options, an important supplementation to China's existing interest rate derivatives family, include swaptions and collar options pegged to both 1-year and 5-year LPRs, which are new benchmark lending rates for commercial banks designed to make interest rates more market-oriented.
Trial transaction- and other related services on the options also started from Tuesday.
To encourage related market growth, commission fees for trading of the LPRs-pegged swaptions and collar options will be exempted for an interim period of two years.
An official from a local financial authority in Shanghai said launching pilot LPRs-pegged swaptions and collar options business is meaningful for deepening interest rate liberalization reform in China.
What's more, the rollout is helpful to enhance Shanghai's role as a Renminbi-denominated financial assets allocation and risk management center, according to the official.
For one thing, the LPRs-pegged options are good for improving interest rate pricing and risk management capacity of financial institutions.
What's more, cultivating the LPRs-pegged options market will optimize the price transmission mechanism between the financial market and the real economy and enrich Chins's market expectation management system, the official said. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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