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The launch of the Basis Trading Platform is an important exploration of Dalian Commodity Exchange (DCE) in serving the individualized risk management demand of entity enterprises. To enable industrial clients to better understand and make use of the platform, Zheshang Futures organizes the “Basis Trading Platform Iron Ore Products Exchange Meeting” in the Shanghai Head Office of DCE upon the one month anniversary of the launch of the platform.
It is learnt at the meeting that the traditional offline trade lacks reliable counter-party and reasonable basis pricing. Shanghai is clustered with large numbers of iron ore trading companies, including the offices of famous mines and the agencies of large domestic and overseas trading companies, which are urgently in need of a fair and transparent platform to satisfy their individualized demand on basis trading. The above-mentioned enterprises have been invited to the meeting, and the functions and features of the Basis Trading Platform have been explained to them in details.
An official of the DCE Basis Trading Work Group says that setting up the Basis Trading Platform complies with the market demand in a certain historical stage and development environment and helps to solve major issues like information asymmetry, market opacity, and no trading among strangers caused by the “white list” barrier, and it is of great significance for promoting the basis trading mode, increasing the spot trading efficiency and facilitating the simultaneous development of the futures and spot markets. The official also introduces the operation mechanism, business process and risk-control measures of the platform, allowing the participants to have a full understanding on the business and operation of this platform.
DCE will continue to carry out market expansion and cultivation, list corn and other new products, expand the traders team, and cooperate with banks and other institutions in accessorial services like supporting financing, credit rating and storage logistics, with an aim of facilitating the 2nd stage construction of the platform. “Our long-term goal is to explore and roll out standard basis trading contracts and floor-traded basis contracts based on individualized trading, which will interact and supplement with the floor-traded futures contracts. And we will keep increasing the liquidity and coverage of the market, form representative basis prices for the reference of the market, and further promote the functioning of the futures market.” says the official.
