UBS Futures Executes First QFII Trade Using China Government Bonds as Futures Margin
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UBS Futures Co. Ltd. said Tuesday it facilitated the first use of Chinese government bonds as margin by a qualified foreign institutional investor (QFII), marking the group’s debut access to a business long available to domestic traders.
The breakthrough follows a Nov. 4 rule revision by the Shanghai Futures Exchange, which updated its guidelines to explicitly allow overseas participants and intermediaries to open bond accounts with China Central Depository & Clearing Co. Ltd. and apply for eligibility to use government bonds as margin. Other major exchanges — including Shanghai International Energy Exchange and the Zhengzhou Commodity Exchange — have since issued similar instructions.
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- UBS Futures enabled QFIIs to use Chinese government bonds as margin for the first time, following new Shanghai Futures Exchange rules.
- The system allows investors to pledge bonds as collateral, charging an annualized fee of 0.05%, improving capital efficiency for overseas participants.
- Market participants see this as a step towards China’s enhanced market openness and broader foreign investment opportunities.
- UBS Futures Co. Ltd.
- UBS Futures Co. Ltd. facilitated the first use of Chinese government bonds as margin by a qualified foreign institutional investor (QFII). This marked their debut access to a business previously exclusive to domestic traders. UBS Futures was also the first firm to support QFII access to China's commodity futures market in 2022. Chairman Ben Teo noted this move strengthens China's regulatory appeal and aids foreign institutions' margin management.
- HSBC Bank (China) Co. Ltd.
- HSBC Bank (China) Co. Ltd. served as the custodian for the deal involving the first use of Chinese government bonds as margin by a QFII. They stated this arrangement offers overseas investors a more efficient capital deployment channel and expands the cross-market use of government bonds.
- 2020：
- China’s commodity exchanges introduced the practice of using Chinese government bonds as margin, but QFIIs were excluded.
- 2022：
- UBS Futures became the first futures firm to support QFII access to China’s commodity futures market.
- November 4, 2025：
- Shanghai Futures Exchange revised its rules to allow overseas participants and intermediaries to open bond accounts and use government bonds as margin.
- By December 9, 2025：
- Other major exchanges (Shanghai International Energy Exchange and Zhengzhou Commodity Exchange) issued similar instructions following the Shanghai Futures Exchange.
- December 9, 2025：
- UBS Futures facilitated the first use of Chinese government bonds as margin by a QFII.
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