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In April this year, Dalian Commodity Exchange (DCE) issued the notice on supporting the futures companies in carrying out the pilots for the “OTC options” and “insurance plus futures” in 2016. Since the issuance, the notice has received active responses from brokers and insurance companies. At present, 12 projects of "insurance plus futures" have been approved. In the meantime, the application for the pilots of “OTC options” is being advanced in an orderly way.
DCE has taken the promotion of the pilots for "insurance plus futures" as a key task this year. Compared with last year, the plan for this year has further stepped up the support for the futures companies to carry out the business by reducing or exempting the trading fees and other means. According to the plan, the futures companies have been required to provide the service to protect the households, family farms and rural cooperatives against the price risks through the projects of "insurance plus futures". The price data related to the insurance contracts shall be based on the corresponding DCE futures data. The pilot products are corn and soybean, and the size of the spot goods shall be appropriately increased to 5 times those of last year. At the same time, the plan for the pilots has made specific requirements for the project period, the qualification and criteria of the participating companies and other factors.
According to a DCE official, at present, under series of strict examination, the pilot projects of 12 futures companies have been approved, including the corn "insurance plus futures" project to be carried out by Yongan Futures in 6 areas in Jilin Province, the "insurance plus futures" corn project to be carried out by Xinhu Ruifeng in Yixian County, Jinzhou, Liaoning Province, and the soybean "insurance plus futures" pilot to be carried out by Nanhua Futures at Zhaoguang Farm in Heilongjiang Province. The 12 pilot projects include 9 for corn and 3 for soybean, mainly covering the main producing areas of corn and soybean such as Liaoning, Jilin, Heilongjiang and Inner Mongolia. Participating in the projects are 7 insurance companies such as PICC P&C, Anhua Agricultural Insurance Co., Ltd., Sunlight Agricultural Mutual Insurance Company, Guoyuan Agricultural Insurance Co., Ltd. and China Continent Insurance. The DCE official said that in the next step DCE will continue to monitor the operation of the pilots, strengthen the management of the projects and ensure the effects of the implementation of the pilot projects.
In addition, the plan for supporting the “OTC options” pilots has also been introduced. Compared with previous years, the pilots for the OTC options will see the number of the products, the sizes of single pilots and the support limits increased significantly. In terms of the pilot products, the total number reaches 13, including the 7 agricultural products of soybeans, corn, soybean meal, soybean oil, palm oil, corn starch and egg and 6 industrial products of iron ore, metallurgical coke, coking coal, LLDPE, PVC and PP. The work in the application for the “OTC options” pilots is underway and is expected to terminate at the end of June.
