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Dalian Commodity Exchange (DCE) released a notice on revising the Measures for Risk Management of Dalian Commodity Exchange on November 23, canceling the “compulsory position reducing for 3 times of no continuous quotes on one side at the same-direction price limit” for 8 products including No. 1 soybean. Namely, when 3 times of no continuous quotes on one side at the same-direction price limit occurs to a futures contract, DCE can adopt the risk management measure according to market situation. Compulsory position reducing is only one of the numerous alternative measures, but not the one that must be taken.
According to this notice, the revision mainly includes the following aspects. The first is unifying the compulsory position reducing management modes of all futures products. When 3 times of no continuous quotes on one side at the same-direction price limit occurs, DCE will cancel the “compulsory position reducing for 3 times of no continuous quotes on one side at the same-direction price limit” for 8 products including No. 1 soybean, but adopt the same measure with products like metallurgical coke. Namely, it will decide a measure according to the market situation and regard compulsory reducing as one of the alternative measures. The second is adjusting the standard of position limits for some products and the application time of the position limits at different stages for all the products except egg. The standard of position limits of soybean meal, corn, soybean oil, RBD palm olein and iron ore at the fixed-amount stage in ordinary months have been doubled; the standard of position limits of soybean meal, corn, soybean oil, RBD palm olein and PVC in the month before the delivery month have been increased from 2 times of the position limit of the corresponding product in the delivery month to 3 times; and the application time for the standard of position limits of all the products except egg in ordinary months has been postponed from the 9th trading day in the month before the delivery month to the 14th trading day.
The new rules shall come into force from the clearing time on November 26 (Monday).
“As DCE cancels the “compulsory position reducing for 3 times of no continuous quotes on one side at the same-direction price limit”, the risk control personnel of futures companies should take the initiative to undertake its risk management responsibility. In the long run, it will benefit the sound development of the whole futures market.” Market participants generally support the revision on compulsory reducing mode by DCE.
On the same day, DCE revised the delivery quality standard and relevant rules of corn starch to adapt to the revised national standard, further meet the spot market demand and bring convenience for the delivery and settlement of clients. The revision mainly includes the following two contents. First, it adjusted the lead content of the corn starch delivery quality from ≤1.0 mg/kg to ≤0.2mg/kg and the over and short of a 40kg package from ±0.5kg to ±0.4kg. Second, it revised the premium and discount settlement rules of corn starch, changing the settlement by the owner and the designated delivery warehouse to the settlement by DCE. In particular, the revised delivery quality standard shall enter into force from Corn Starch Futures 2001 contract, and the revised settlement rules of corn starch premium and discount shall enter into force from December 1, 2018.
