As an important part of efforts in internationalization of the iron ore futures, the launch of the bonded delivery business has been approved recently. Currently, Dalian Commodity Exchange (DCE) has completed the preparations for the businesses related to the bonded delivery of the iron ore futures, with the pilot expected to be implemented on the I1606 Contract.
Different from the LLDPE and other products with bonded delivery implemented in the areas under the special supervision of the Customs since 2014, the iron ore is the first product in Chinawith the bonded delivery business implemented in the regulated bonded areas designated by the Customs. In April, the Ministry of Finance and State Administration of Taxation jointly issued the "Notice on the Value-Added Tax Policies for Bonded Delivery Operations of the Crude Oil and Iron Ore Futures", granting the temporary VAT exemption for the bonded delivery of DCE’s iron ore futures. This means the bonded warehouse receipts of the iron ore futures can be transferred with no barriers, and the clients can conduct exchange for physicals, re-delivery, transfer and other operations with the bonded warehouse receipts, as well as used for pledge outside DCE, offsetting futures margins, etc.
Based on the current progress, the technical system of DCE will be well prepared for the launch of the bonded delivery business for the iron ore in March 2016. After completing the relevant procedures, bonded delivery will be carried out.
Besides bonded delivery, DCE has also been vigorously making other efforts in iron ore internationalization, with smooth progress achieved in general. With the overall plan and the relevant preparations completed, DCE has already submitted the application material to designate the iron ore futures as a special product, so that foreign brokerage firms and relevant investors can also participate.