Controversy Over Bean Futures Boils Over : China: A senior Beijing Commodities Exchange official denies traders’ charges of irregularities.

A group of Chinese futures traders has accused the fledgling Beijing Commodity Exchange of irregularities and demanded an inquiry into allegations of fraud in the green bean trade there.

A senior exchange official denied the charges Friday and said the actions in question were merely intended to curb speculation.

The controversy highlights the confusing state of the futures industry in China. The government is allowing only a few exchanges to stay in business, some after merging with smaller markets. Most have been ordered shut down.

The continuing clampdown is part of a government anti-inflation strategy designed to check price rises in key raw materials. Scores of futures contracts in commodities have been canceled.

Beijing maintains that China’s futures have been influenced by price manipulators and become a haven for hot money from inside China and overseas, and especially from Hong Kong and Taiwan. All brokerages with foreign funding have been shut and are not expected to reopen.

The Shanghai Petroleum Exchange all but closed early this year after Beijing capped the price of refined oil products--ending speculation altogether.

In the new Beijing flap, a group of commodity traders sent an open letter to the China Securities Regulatory Commission, the country’s financial watchdog, demanding an inquiry into the allegations of irregularities by the exchange where they trade. The letter says the Beijing Commodity Exchange made two controversial announcements in a span of 100 trading minutes, causing severe fluctuations in the price of the January 1995 contract for green, or mung, beans.

“This is like an emperor issuing an order in the morning and rescinding it in the evening,” said one of the traders who organized the protest letter.

The first notice, issued late Aug. 17, banned compensation for buyers who had to take delivery of mung beans older than those specified in their contracts. The move sparked a selloff. The second notice early the next day in effect reversed the first, restoring compensation for a limited period. Traders, who were angered and confused by the move, said the exchange compounded the problem by posting the second notice well after morning trading had begun.

The exchange executive defended its actions, saying the announcements were designed to curb speculation and that they did not send conflicting signals.

“This exchange is not a casino,” he said. “Our policy is reasonable and aims to prevent speculation. If no announcements had been made, Beijing would have become a garbage dump for old mung beans from the whole of China.”