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China’s risk clamp down hits commodity trades, niche broker business

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New rules in China aimed at curbing risk and speculation have triggered an exodus of institutional cash from the country’s commodities futures markets and hobbled a thriving niche business for brokers.

Before the ban, futures brokers were launching hundreds of structured products a month offering guaranteed returns, which attracted institutional cash and fed billions of dollars into the commodity futures markets.

Now, fresh launches are just a trickle as the brokers comply with new rules that include a ban on guaranteed returns. With no promise of big returns, the 100 brokers or so that run asset management businesses offering these products are struggling to keep clients.

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Paul

The author Paul