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Dalian Commodity Exchange (DCE) issued a notice on February 26 to permit overseas individual clients to trade iron ore futures from February 26, 2019.
A DCE official said that iron ore futures officially ushered in overseas traders on May 4, 2018. At the beginning of the internationalization, overseas individual clients were not permitted to open an account for trading. Iron ore futures have maintained stable operation over the past one year, with sufficient market scale and liquidity and the correlation between futures price and the Platts Index remaining above 90%. Judging from the development of the internationalization business, till February 26, 118 enterprises from Hong Kong, Singapore, Britain, Australia, Japan and other countries and regions have opened accounts, and the open interests volume of overseas clients has increased steadily. Meanwhile, the settlement of foreign capital funds has been smooth; relevant work on withdraw & deposit and swap has been in order; and overseas clients have successfully completed physical delivery at Dalian Port through bonded delivery. In a word, all internationalization systems of DCE have gone through market tests, and DCE has been qualified to bring in overseas individual clients.
As for how to trading iron ore futures by overseas individual clients, the DCE official said that the same account-opening methods will be adopted for overseas individual clients as those for corporate clients, namely directly opening an account or sub-entrustment. Due to the uniqueness of the trading code, overseas clients opening accounts in the two ways simultaneously or via different overseas brokerages cannot engage in futures trading in the same futures company. With regard to market access, overseas individual clients should meet some trading conditions. The account-opening institution should, according to the access requirements on traders in the “Management Measures of Dalian Commodity Exchange for Suitability of Traders of Specified Domestic Futures Products”, evaluate overseas individual clients in terms of their knowledge, trading experiences, available capital, legal compliance and integrity and then apply for trading codes for the qualified overseas individual clients. Besides, an overseas individual client should make a comprehensive assessment on economic capability, the cognitive competence on market and products and the risk control and risk tolerance and make a prudent decision on whether to trade specified futures products, thus avoiding losses caused by blind trading.
Relevant market participants said that the Chinese iron ore futures market has sufficient market scale and liquidity, and it is possessed with good risk-avoiding and investment value, presenting the same attractiveness to overseas corporate clients and individual clients. With the wider promotion of the iron ore futures in the overseas markets, more and more overseas individual clients have shown their interests in trading of the iron ore futures, and they hoped to involve in the trading soon. The introduction of overseas individual clients for the iron ore futures will expand the participation of overseas markets and be of great significance for diversifying participants in the iron ore futures market, enhancing the international influence of the iron ore futures price and strengthening the opening up of the futures market.
