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It is learnt that Dalian Commodity Exchange (DCE) will adopt the new system of rules with the structure of "general rules for trading - detailed rules for specific futures products" on July 1, 2019.
To adapt to the need of building a first-class derivatives exchange in the world, upon discussion and approval of the DCE Board of Governors and reporting to the China Securities Regulatory Commission (CSRC), DCE released the “Notice on the Optimization for the System of Rules” on December 28, 2018, which optimized the system of rules according to the structure of "general rules for trading – detailed rules for specific futures products", with both the two systems of rules before and after the optimization available on the Chinese and English DCE websites. The optimization does not involve substantial modification to the contents of the rules, and the amendments to relevant rules and the detailed rules for specific futures products upon consolidation and splitting shall come into force from July 1, 2019.
In the 6-month transition after the releasing of the notice, DCE simultaneously updated the two systems of rules before and after the optimization according to the corresponding modifications to the rules. Besides, it has carried out publicity activities and training in the market to allow domestic and overseas market participants to learn about and adapt to the new system of rules soon.
In the new system of rules, the bylaws and the trading rules are of the first level, and their formulation and revision should be reported to the General Meeting of DCE Members for deliberation and be approved by the CSRC. The general rules for trading and the detailed rules for specific futures products constitute the second level. The former consists of general rules and basic regulations related to futures trading, including those for trading, settlement, delivery, standard warehouse receipts, hedging and arbitrage; the latter is individualized and parametric stipulations for products and constituted by 17 detailed rules of futures products. The formulation and revision of the general rules and detailed rules should be reported to the CSRC in advance and be deliberated by the DCE Board of Governors.
Compared with the previous system of rules, the new one is established by DCE under the new circumstance of the futures market’s internationalization and by relying on its own reality and targeting to the international standard. With the scientific level, it can continuously satisfy the need of business innovation in the futures market. Its main features are as follows:
The first is enhancing the scientific and normative nature of the rules. The structure of "general rules for trading - detailed rules for specific futures products" conforms to the legislative technique feature: from abstract to concrete and from general to specific. In the new system of rules, all rules under the general rules are named “Measures” and all rules under the detailed rules for specific futures products are named “Detailed Rules”, thus making the logic among the rules more clear and bringing more convenience for understanding by the market.
The second is intensifying the expansibility and compatibility of the rules. The new system of rules can better adapt to the diversification of products and trading instruments, and the demand on the opening-up of the futures market and the expansion of the over-the-counter business. It will help to set up a system of business rules that adapts to the comprehensive, multi-level and diversified pattern for futures and options markets, over-the-counter and exchanged-traded markets, as well as domestic and overseas markets.
The third is balancing the stability and variability of the rules. The general rules are relatively stable, and they are convenient for forming stable market expectations. The detailed rules will be adjusted according to the nature of the products and the market situation, and formulating the detailed rules for each product can avoid the impact of the adjustments to the rules of some products on the whole system.
The fourth is improving the international level of the rules. The new system of rules has drawn from the conventions of the international market, and it is easy to be understood and accepted by the international market, thus boosting the exchange to further its internationalization business and build an international commodity risk management center.
A DCE official says that DCE will continue to well build its system of rules and consolidate the institutional basis for business development according to the development strategy of building an open, diversified, first-class derivatives exchange in the world. And it will further optimize the business system and refine the contents of rules by focusing on the rules’ cores and considering the business development needs of the domestic and overseas markets, the over-the-counter and exchange-traded markets, and other fields, with an aim of building a world-class system of rules for the exchange.
