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The spokesperson of Dalian Commodity Exchange (DCE) said on December 4 that DCE has recently taken some measures for a number of futures, such as expanding the price limit and increasing the standard of trading margin and commission charge. The measures have been designed to prevent in advance the potential risks in the market caused by significant price fluctuations and overheated trading of relevant futures, so as to guide the rational trading decisions of the investors and ensure the sustained steady operation and development of the market. In the next step, DCE will continue to track and appraise the market situation and the operation of the futures. When necessary, DCE will take further regulatory measures to prevent risks.
The spokesperson said that for a long time the ratio of volume to open interest has been comparatively low on the futures market in Dalian, remaining at the level of less than 1 on the whole, while the industry clients have been active in participating in and making use of the market with a relatively high level of shares of positions. The market functions of price discovery and hedging have worked well. However, recently the ratios a small number of futures have increased rapidly. Especially since November, affected by the economic and financial situations, changes to geopolitics and oil prices, spot supply and demand and other factors, the PP futures have recorded significant price fluctuations, and reached the price limit several times, with the trading heated continuously. In recent one month, the ratios for the futures have been high. In this case, in order to maintain the stable development of the market, DCE has timely expanded the price limits for the LLDPE and PP futures, increased the standards for trading margin, and the intra-day trading fee for the same contract of the PP futures have been doubled. The measures have been taken to inhibit the overheated trading at an early stage, direct the investors to trade rationally, prevent the potential risks on the market, and ensure that the market operates safely and steadily and functions well so as to better serve the real economy.
Background Information
On November 27, DCE issued a notice to increase the minimum trading margin and the price limit for the PP and LLDPE futures to 6% and 5% respectively, starting from the settlement on November 30; at the same time, starting on December 1, the 50% fee discount for intra-day trading of the same contract of the PP futures will be suspended, and the fee of the PP futures will be resumed to 0.005% of the transaction amount.
