REGULATORS approved the launch of crude oil futures on the Shanghai Futures Exchange on Friday aiming to bolster global use of its yuan currency although some market players see China’s lack of oil market liberalization limiting the contract’s appeal.

    The world’s largest crude oil buyer after the United States, China hopes the contract will become a benchmark in Asia and has said it will allow foreign investors to trade in the contract without setting up a local subsidiary.

    The China Securities Regulatory Commission (CSRC) said it approved the launch but did not give a timeframe for when the futures would start trading.

    “As China’s first internationalized futures ... the contract will attract participants both domestic and foreign and an internationalized settlement platform will be established,” the CSRC said.

    The contract will be priced in China’s yuan and the U.S. dollar, according to industry participants with direct knowledge of the plan. The use of the yuan would fit with China’s long-term goal of globalizing its currency.

    But industry players said China’s reluctance to liberalize its crude oil import market could limit the new contract’s ability to attract trading.

    “Without the opening of China’s crude oil market, the futures contract is incomplete as it has to be backed up by physical trading of the oil to attract liquidity,” said a Beijing-based trader with an international oil major.(SD-Agencies)