To strengthen management on delivery warehouses and smoothen the delivery process, Dalian Commodity Exchange (DCE) issued the notice on revising the Measures for Designated Delivery Warehouses Management of Dalian Commodity Exchange (the Measures for short) on May 20.
In particular, the Measures clearly defines the designated delivery warehouse: a legal person designated by the Exchange to provide service for the physical delivery of futures contract at designated delivery points. On this basis, the designated delivery warehouses include the “Designated Storage Warehouses” and the “Designated Factory Warehouses”, and the application, examination and approval for the storage warehouses and factory warehouses have been specified respectively, thus providing a clear code of conduct for the market. Besides, the Measures defines the Designated Storage Warehouse as a Designated Delivery Warehouse providing storage and other services as a custodian, and the Designated Factory Warehouse as a Designated Delivery Warehouse which undertakes to provide goods and other related services by way of security approved by the Exchange. This has distinguished between the storage warehouse and factory warehouse based on their main features, highlighting that the former offers storage and other services as a custodian, while the latter offers goods and relevant services in the guarantee way recognized by the exchange.
The Measures also make some adjustment to the application requirements and documents for the designated delivery warehouse. First, the previous Measures stipulated that the entity applying for the designated warehouse should submit a Letter of Guarantee while the adjusted Measures requires that the applicants with the registered capital or the net asset of less than RMB 1 billion should provide the Letter of Guarantee, which simplifies the application process for large industry clients. Second, the Measures adds that the entity applying for the designated factory should meet the requirements on spot goods in terms of the quality, production quantity or trade volume as otherwise specified by the exchange, which will strengthen management on the qualification of the factory. Third, the applicant is required to apply for the intent delivery site within the scope specified by the exchange and provide the Application Form for the intent delivery site for a better connection with the existing delivery business.
Besides, upon the examination and approval of the General Administration of Customs, areas under the Customs supervision or the bonded supervision places can engage in the bonded delivery of iron ore futures. With regard to that, the Measures stipulates that for the entity applying for the bonded delivery of futures, the areas under the Customs supervision or the bonded supervision places should get approval from the Customs before engaging in the bonded delivery business of futures.
It should be noted that adjustments to the application and approval conditions for the designated delivery warehouses target those under application, with no influence for the established ones.
A market insider stated that delivery is an important part in the futures market. In recent years, DCE has been active in exploring new delivery businesses, expanding delivery areas and strengthening management on delivery warehouses. The revised Measures is more practical and operable, which will further increase the application efficiency and reduce the delivery cost, ensuring that the newly-established delivery warehouses could satisfy the delivery needs of domestic and overseas clients and boost the effective connections between the spot and futures markets.
