As confirmed by the country's stock regulator on Friday, China has, in principle, approved the launch of stock market index futures, in addition to short selling and margin trading of shares, a move which has managed to provide investors with much needed hedging tools.

The change, which was approved by the cabinet back in 2008 but got delayed on the back of the global financial downturn, will first be carried out on a trial basis, as confirmed by the China Securities Regulatory Commission.

Index futures will be traded on the China Financial Futures Exchange in Shanghai, and the process will take about 3 months to commence, but the trial period for margin trading and short selling, on the other hand, will arrive relatively soon, shared the CSRC.

"This is positive news for the market, and it wills likely change people's investment strategies", said Huang Yan, fund manager at Guotai Fund Management Co in Shanghai.

China's market has been notoriously volatile, and has been hurt the most by lack of sophisticated tools to effectively manage all the risks that hit the stock exchanges across the country.