Dalian Commodity Exchange: Egg Futures Contracts To Be Listed On 8th

DCE issued the notice on the matters related to the listing of the egg futures contracts.
The contracts and relevant revised detailed rules for implementation were also announced on the same day.

Dalian Commodity Exchange (DCE) issued the “Notice on the Matters Related to the Listing of the Egg Futures Contracts” on November 4, announcing that the egg futures contracts have been approved by the China Securities Regulatory Commission (CSRC) and will be listed as of November 8, 2013.

According to the notice, the first batch of the egg futures contracts to be listed include JD1403, JD1404, JD1405, JD1406, JD1409 and JD1410. The benchmark listing prices for the contracts will be informed on the trading day before the listing. During the early period of the listing, the trading margin of the egg futures contracts is tentatively set at 8% of the contract value, the price limit is tentatively set at 4% of the settlement price of the previous trading day and the price limit on the first listing day of new contracts is set at 8% of the benchmark listing price. The commission charge for the trading of the egg futures contracts is 0.015% of the sum of the traded contract. After the settlement on each trading day, DCE will announce the trading volume and position of all the members for the egg futures contracts on the day.

In addition, the notice has also announced the lists of the designated quality inspection agencies and the designated delivery warehouses for DCE egg futures. China Certification & Inspection Group Inspection Co., Ltd. and SGS-CSTC Standards Technical Services Co., Ltd. are the designated quality inspection agencies of the egg futures; Sinotrans Shanghai Cold Chain Logistics Co., Ltd., Wuxi Tianpeng Vegetable Basket Project Co., Ltd., COFCO (Shenzhen) Co., Ltd., Shijiazhuang Sogreen Foodstuff Co., Ltd., and Yicheng City Xiangda Farming Co., Ltd. are the designated delivery warehouses of the egg futures; Hubei Shendan Healthy Food Co., Ltd., Hubei Shenlu Group, Wuhan Lingxing Group Ziranyuan Food Co., Ltd., Dalian Hanwei Chicken Farming Co., Ltd., Qingdao Tianrui Farming Technology Co., Ltd., Dezhou Heshan Ecological Agriculture Co., Ltd., Hebei Jinkai Farming Co., Ltd., Hebei Minwang Feed Co., Ltd., Henan Province Huimin Poultry Co., Ltd., and Jiangsu Hongxuan Ecological Agriculture Co., Ltd. are the designated delivery factory warehouses.

On the same day, DCE also announced the “Egg Futures Contracts of Dalian Commodity Exchange” and the relevant revised detailed rules for implementation approved by the CSRC. According to the contents of the contracts announced by DCE, the traded products of the egg futures are fresh eggs, the trading unit is 5 tons / lot, the quoting unit is yuan (RMB) / 500 kg, the minimum price change is RMB 1 / 500 kg, the price limit is 4% of the settlement price of the previous trading day (8% in the early period of listing), the contract months are January, February, March, April, May, June, September, October, November and December, and the delivery mode is physical delivery.

According to the revised detailed rules for trading, delivery and settlement and the revised measures for risk control management, the maximum number of each order in the trading instruction of the egg contracts is 300 lots and the delivery unit is 5 tons. Unlike other products, DCE has made special provisions on dealing with epidemics for the egg futures in the revised detailed rules for delivery. In the course of the delivery of the egg futures, when a major epidemic breaks out and a certain percentage of delivery warehouses are in the affected area, DCE may announce an irregular situation, and DCE president may take the emergency measures of suspending or terminating the trade. In settlement on the day of terminating the trade, all the positions of each egg contract month shall be closed out at the settlement prices of the previous trading day.

In management of positions, in order to strictly control risks, the related detailed rules provide that when the total positions of both sides for the contract month are less than or equal to 80,000 lots, the trade margin is 5% of the contract value, and 7% for more than 80,000 lots. As for the position limit, when the unilateral position of the egg contract is more than 15,000 lots, the futures company member’s position limit of the contract shall not be more than 25% of the unilateral position; when the unilateral position of the egg contract is less than or equal to 15,000 lots, the futures company member’s position of the contract is not limited. The normal month position limit of the egg contract for non-futures-company members and clients is 300 lots.

Market participants believe that the introduction of the egg futures, China’s first livestock and fresh produce futures product, is of far-reaching significance for both related industries and the development of China’s futures market. The listing of the egg futures will facilitate the formation of the centralized and authoritative market prices, provide a hedging tool, serve the farmers and enterprises’ production and operation and push forward the scale and standardized development of China’s egg industry as well as promote the industrial upgrading; the listing of the egg futures, the first livestock futures product, will enrich the series of China’s futures products and expand the scope of the agricultural futures market serving the national economy.

Market participants also believe that according to the arrangements for the listing of the egg futures announced by DCE, the price limit of the egg futures is set at 8% during the early period of the listing and the commission charge is at the rate of 0.015%, higher than other products, which show the management’s guidelines of strict management, not seeking trading volume and preventing excessive speculation, and avoiding and controlling market risks so as to ensure a smooth start for the first futures product of livestock and fresh produce.