China opens ETF options to foreign investors

China will allow qualified foreign investors to trade exchange-traded fund (ETF) options onshore starting from October 9, 2025, according to an announcement by the China Securities Regulatory Commission (CSRC) on Wednesday. However, the trading will be limited to hedging purposes only. This move is part of China’s ongoing efforts to open up its financial markets to foreign investors. It follows recent reforms that have gradually lifted restrictions on foreign investor access to domestic derivatives, including commodity futures and options, since early 2024. The CSRC stated that this reform will enable global investors to use ETF options, which are essential risk management tools, to better navigate China’s volatile equity markets. ETF options trading volume in China is already significant, with open interest exceeding 1 million contracts in main indices, despite strict position limits imposed by the regulator. Hu Xisha, head of financial innovation at Huatai Securities, a Chinese financial institution, emphasized that the inclusion of ETF options will expand arbitrage and risk management opportunities.

China expands ETF options access

This, in turn, is expected to foster market demand for ETFs among long-term funds. China first introduced ETF options with the launch of the SSE 50 ETF option on the Shanghai Stock Exchange in February 2015. The CSRC plans further reforms, including expanding the Qualified Foreign Institutional Investor (QFII) scheme, increasing the number of available derivatives to 100 products, and potentially launching RMB forex futures. At the Lujiazui Forum on June 18, 2025, CSRC Chairman Wu Qing indicated that more capital market reforms are on the horizon. These include a revamp of the QFII scheme and the possible launch of RMB forex futures. The opening of the ETF options market to qualified foreign investors is expected to attract more long-term foreign capital by providing expanded risk management tools and enhancing market stability. This move is another significant step in China’s ongoing efforts to integrate its financial markets with the global economy.