January 4, 2019 / 10:12 AM / 16 days ago

UPDATE 1-China to launch rubber, cotton and corn options on Jan 28

(Adding background)

BEIJING, Jan 4 (Reuters) - China will launch options for rubber, cotton and corn on Jan. 28, the country’s securities regulator said at a press briefing on Friday, adding to the tools available to hedge on price risks in the world’s largest agriculture market.

The regulator approved the launch of corn and cotton options in June last year.

It now has also approved trading of rubber option contracts, according to Gao Li, spokeswoman for China Securities Regulatory Commission.

“Prices of natural rubber, cotton and corn have been quite volatile in recent years. Launching these options contracts can help enterprises manage risks effectively,” the regulator said in a statement published on its website.

China is the world’s top consumer of rubber and cotton, and its second-largest consumer of corn. In 2017, China launched soymeal and sugar options, its first such commodity derivatives.

Options give a holder the right to buy or sell a commodity at a particular strike price and are widely used in Europe and the United States by investors across commodities markets. Users range from commercial hedgers such as farmers and oil drillers to institutional and speculative investors. (Reporting by Xiaochong Zhang, Hallie Gu and Dominique Patton; Editing by Tom Hogue)

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