In order to fully listen to the opinions and suggestions on the market, further improve the rules and operation mechanism for the corn starch futures and ensure the scientific and rational designing of the contract rules as well as give effective play to the market functions after the listing, Dalian Commodity Exchange (DCE) issued a notice on November 21 to solicit opinions and suggestions on the contracts, rules and other contents for the corn starch futures from all market participants. The corn starch contract, China’s new and first futures product of the downstream corn industry, is to make the official debut.
DCE is now soliciting opinions and suggestions in the market on the exposure drafts of the “Corn Starch Futures Contract of Dalian Commodity Exchange”, the “Amendments to Trading Rules of Dalian Commodity Exchange”, the “Amendments to Detailed Rules of Dalian Commodity Exchange for Delivery”, the “Amendments to Measures of Dalian Commodity Exchange for Risk Management”, the “Amendments to Measures of Dalian Commodity Exchange for Management of Designated Delivery Warehouses”, and the “Amendments to Measures of Dalian Commodity Exchange for Management of Standard Warehouse Receipts of Soybean Meal, Soybean Oil, RBD Palm Olein, Coke, Coking Coal, Iron Ore, Egg, Blockboard and Corn Starch”, and the deadline for the solicitation is December 1, 2014.
According to the contents of the contract and the exposure drafts of the detailed rules for trading and delivery, the corn starch futures are adequately compatible with the corn futures in designing, the trading unit is 10 tons / contract, the tick size is RMB 1 per ton, the price limit of the contract is 4% of the settlement price of the previous trading day, the minimum trading margin is 5% of the contract value, the contract months are January, March, May, July, September and November, the last trading day and the delivery day are the tenth trading day of the contract month and the third trading day after the last trading day respectively, and the delivery mode is physical delivery.
The traded object of corn starch announced in the exposure drafts is the starch produced and processed with the corn produced domestically as the material and the place of production in Chinese territory. The delivery quality standard is made with reference to the national standard of GB/T8885 Edible Corn Starch, with the quality requirements including the sensory indicators, the physical and chemical indicators and hygienic indicators, etc. the rolling delivery system is implemented in the corn starch contracts, it is required that the brand new double-layer or peritoneal bags should be used in packaging the delivery products with the net weight of each bag at 40 ± 0.5 kg or 830 ± 5 kg, and in sampling inspection, it is stipulated that the lot grouping should be conducted in the products produced by the same producer and packaged in the same specification, with each lot including 300 tons.
The corn starch futures have the same designing in the margin system as DCE’s other products at present, the minimum margin is 5% of the contract value, in the delivery month and the period after the 15th trading day of the month prior to the delivery month, the margins are 20% and 10% of the contract value respectively, and DCE can increase the trading margin according to the growth of the open interests of the contract and shall make it public.
In the designing of the position limit system, with reference to the arrangements for other products, no position limit for the corn starch futures is set for the futures company members and the phased and tiered position limits will be implemented for non-futures-company members and clients. In specific, for non-futures-company members and members, the position limits in the delivery month, from the tenth trading day to the end of the month before the delivery month and the ordinary months are 1,500 contracts, 4,500 contracts and not more than 10% of the total positions of the contacts (with the position limit at 15,000 contracts for the open interests less than 150,000 contracts) respectively.
According to the exposure draft of the amendments to the measures for management of standard warehouse receipts, the period of the date for applying for registration of the standard warehouse receipts of the corn starch from the production date shall not be more than 90 (including 90) calendar days; all standard warehouse receipts for the corn starch must be written off before the last trading days in March, July and September each year.
A market researcher said that as a major downstream corn processed product, the corn starch maintains the compatibility with the corn futures contract in size, months and other contract contents, with the designing of the relevant rules not only according with the characteristics of the product and the practices of the spot trade but meeting the operation rules of the futures market, which will help the industrial enterprises participate in and utilize the corn starch futures market as well as conduct the cross-product arbitrage. In the ten years since the listing was resumed on DCE, with the changing spot market and industrial situations, the corn futures have run soundly with the constant improvement and cultivation of DCE and the market functions have been gradually brought into effective play. The listing of the corn starch futures will not only help guide the industrial upgrading and eliminate the backward capacity but conduce to improving the futures product line of the corn industry chain, which will facilitate the alternative hedging of the clients in corn-related industries in North China.
A DCE official said that as a corn processed product, the corn starch is the basic raw material for starch sugar and many other industrial products, accounting for about 94% of China’s total starch output. As an important field in China’s corn processing, the corn starch industry can extend the agricultural industry chain with the healthy development, playing an important role in increasing the value added of the agricultural products, boosting the farmers’ incomes and making the rural economy more prosperous. On the basis of comprehensive and in-depth market surveys, extensive solicitation of opinions and full demonstration, DCE has completed the designing of the draft for the corn starch futures contract, and hopes, through this effort in solicitation, to further improve the contract and rules, ensure the successful listing, smooth operation and effective market functioning of the contracts in the future, better serve the spot enterprises and industrial development and serve the “San Nong (agriculture, farmers and rural areas) and the real economy.