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On May 6, Dalian Commodity Exchange (DCE) issued a notice to announce that starting from May 10, the non-intra-day trading fees of metallurgical coke, coking coal, iron ore and PP futures shall revert to 0.006% of the turnover, and the intra-day trading fees for the same contract of the four futures products shall remain unchanged by 0.072% for metallurgical coke and coking coal, 0.03% for iron ore and 0.024% for PP. A DCE spokesperson said that the bifurcation between the intra-day and non-intra-day trading fees has been designed to curb excessively frequent short-swing trading of some futures products and take precautions against the over-speculation risks, while ensuring the normal non-intra-day trading, the efficiency of market operation and the functioning of the futures market in price discovery and hedging. Next, DCE will continue to intensify the supervision, reinforce the inspections in the market, severely crack down on the violations and ensure the safe and stable operation of the market.
The spokesperson said since March 9, especially from April 18, some products have been overwhelmed by short-swing trading, seeing the volume to open interest ratios stay highs, and the market has shown the tendency toward over-speculation. In such a context, the Exchange took series of measures to in line with and serve the development of the real economy, to ensure the safe and steady development of the market and hold the bottom line of no occurrence of systemic and regional risks. These measures included, for related products, lifting their price limits and the minimum trading margin, cancelling the exemption from the unusual transactions in arbitrage trading, and raise the maximum volumes of the warehouse receipts for some delivery factory warehouses of the metallurgical coke futures. Measures abovementioned targeting at reinforcing the capability of market itself to control risks, focusing on curtailing the excessively frequent short-swing trading by increase the costs has been working well and the volume to open interest for related products tapered off. Meanwhile the momentum of short-swing speculation contained. At the closing of May 6, the daily average volume to open interest ratios of the metallurgical coke, coking coal, iron ore and PP futures in a week tumbled to the current levels of 2.02, 1.12, 1.92 and 0.99 respectively (from May 3 to 6) from 7.26, 4.43, 4.74 and 3.36 respectively in the week (from April 25 to 29) recording the highest levels since last month.
The spokesperson also said that amid the introduction of the measures, the Exchange studied modes of differentiating the fees for intra-day, non-intra-day and hedging trading. Based on the market situation, on April 27, its fees for hedging companies were reverted to the low-level at the end of last year, so as to ensure that the costs of hedging trading would not increase. Upon the effects of the measures and prudent assessment of market operation, the Exchange resolved to conduct a differentiated management on intra-day and non-intra-day trading fees. The fees of non-intra-day trading were forced to restore to original levels, while strictly managing the intra-day trading and maintaining the current high trading fees. Currently DCE is advancing the revision to the relevant rules and systems, in a bid to further improve the risk management system, institute long-term working mechanism. The initiatives will be institutionalized in terms of the management and guidance on the reasonable intra-day trading by differentiated trading fees. Thus the market expectations can be enhanced, and initiatives and effectiveness of the members and investors in preventing and controlling the risks will be improved.
