Dalian Commodity Exchange (DCE) released relevant rules on ushering in overseas traders of iron ore futures on March 27, which has made targeted improvements and supplements on the suitability of traders, the procedures of account opening, the settlement of sale of foreign currency, the bonded delivery, and other rules. To allow overseas traders to know more about relevant rules and for the convenience of their participation in trading, the series reports on “Explanation on Relevant Rules on Ushering in Overseas Traders of Iron Ore Futures” are to be presented from today.
It is introduced that as overseas traders are to be ushered in for specified products of iron ore futures on the basis of existing products in the market, the “DCE Management Measures on Trader Suitability of Specified Products” (the “Measures” for short) first makes clear its scope of application, thus differentiating the “old and new” upon the implementation of the “Measures”. Specifically, domestic clients that have opened an account before the implementation of the “Measures” can directly take part in the futures trading of specified products without being re-examined on its suitability; and for domestic and overseas clients which open new accounts after the implementation of the “Measures”, relevant account-opening institutions should earnestly execute the requirements in the “Measures”.
In the trader suitability system of specified products, DCE has set up some access requirements like knowledge test, trading experience, available capital, compliance and integrity. Traders should finish an online test on the platform of the China Futures Association and pass it by getting 80 scores or above. For the convenience of overseas traders to take the test, traders can choose the language of the test (in Chinese or English).
DCE requires that traders should have real trading experience. With regard to overseas futures trading experience, they should provide the details, documents of settlement or other vouchers of overseas futures trading in overseas futures trading venues under the regulation of national (regional) futures regulatory institutions (The countries or the areas should sign memoranda of understanding with the China Securities Regulatory Commission).
To ensure that traders are of risk tolerance, the available capital balance in the margin account at the account-opening institution should be no less than RMB 100,000 or equivalent in foreign currency after the settlement of each day for the first 5 trading days of applying for trading code or opening trading authority (The balance in RMB and in foreign currency will be calculated together), to ensure the certain capital basis of each trader.
Finally, DCE requires traders should not have severe bad credits or been banned in futures market by authorized regulatory organs, and they should not been banned or restricted in futures trading by law, administrative rules, regulations and the business rules of the Exchange. In addition, institutional clients should have relevant systems in terms of internal control, risk management and information disclosure for futures trading apart from the above requirements.
