In its fervent bid to realize its dream to be a world-class financial center, Shanghai has established a market for almost everything. But the various elements that are essential to the development of those markets are mostly absent. As a result, the markets are prevented from fulfilling their designed functions.

The 3-year-old index futures market is a case in point.

The market, opened in April 2010, is still limping along without making much of an impact on the stock market. The volume of trading in index futures is tiny compared to the size of the stock market. As such, it is seen to have little value for hedging by institutional investors.