Dalian Commodity Exchange Takes New Measures To Preclude Risks

  • Trading Systems , Compliance
  • 27.04.2016 08:15 am
Dalian Commodity Exchange (DCE) issued a notice to announce that according to the relevant provisions in the “Measures of Dalian Commodity Exchange for Risk Management”, it will, starting from the settlement on April 25, adjust the price limits and the minimum trade margins for 8 futures products as well as the trading fees of the iron ore and the PP futures. Starting from the trading on April 25 (the after-hours trading at 21:00 on Friday this week), DCE will cancel the exemption for the unusual transactions of arbitrage clients, so as to prevent and control the risk of overheated trading.
According to the notice, the price limit of the futures products of No. 1 Soybeans, Soybean Meal, Corn, Corn Starch and PVC will be adjusted to 5% and the minimum trade margin will be adjusted to 7%. The minimum trade margin of LLDPE and PP will be adjusted to 7%. The minimum trade margin of Iron Ore will be adjusted to 8%. As regards the contracts both meeting the requirements for adjusting the trade margin and price limit stipulated by the “Measures of Dalian Commodity Exchange for Risk Management”, their minimum trading margin and price limit shall be subject to the higher one provided by the Measures. At the same time, the trading fee rate of the iron ore and PP futures will be adjusted to 0.009% of the transaction amount. The application of the provision of “the self-trade behavior, the behavior of frequently placing and cancelling orders and the behavior of placing and cancelling large-amount orders caused by arbitrage trading shall not be regarded as abnormal trading behaviors” in the “Relevant Regulatory Standards and Processing Procedures of the ‘Measures against Abnormal Trading on Dalian Commodity Exchange(for Trial Implementation)’” will be suspended.
A market analyst pointed out that in the context of the changes to the macroeconomic operation and the monetary policy and the advancement of the reform on the supply side, the supply-demand structures of related industries have begun to transform, the trading volume to turnover ratio of several products in the domestic futures market have continued to increase rapidly, the ranges of price fluctuations have expanded with the price limits reached quite frequently, and the tendency of overheated trading has appeared. In such circumstances, continuously adjusting the price limits, the minimum trade margins and the trading fees of the contracts will help DCE to prevent and control the potential risks caused by overheated trading, guide rational trading and further strengthen the capacity of the market for resist and defuse the risks.

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