New toys for flash boys in China's fledgling derivatives trade

Shanghai

THE rapid liberalisation of China's derivatives market has attracted a new breed of creative traders employing complex trading strategies that can generate quick profits - and an extra dollop of risk - in China's runaway stock boom. Brokerages and fund managers are investing in mathematics whizzes and hardware, and moving servers onto trading floors to gain precious microseconds dealing in new options and futures contracts, helping China's CSI300 index become the world's most traded equity futures contract in May.

The introduction of new derivative products is intended to help investors hedge risk, but it also gives rise to the kind of sophisticated trading strategies that have made quick-trading "flash boys" notorious in the United States and Europe.