The continuity of active contracts of soybean meal, corn and iron ore futures of Dalian Commodity Exchange (DCE) has been remarkably improved recently. In particular, the price continuity of 1807 Contract and the rationality of price difference prices among contracts have been increasingly improved; the liquidity has been greatly increased; and the trading scale has grown steadily, which result in the increasing number of investors involving in the trading.
Multi-measures to promote the “continuous activeness” of futures contracts
To promote the continuous activeness of futures contracts, DCE has chosen soybean meal, corn and iron ore futures to pilot the measures as they have good industry bases, mature markets and strong needs on continuously active contracts. Apart from the active contracts in January, May and September, from December 2017, DCE has taken such measures as reducing trading fees and introducing futures trading companies for contracts in March, July and November to enhance the contracts’ trading scales and liquidity.
After the implementation of these measures, the trading volumes and position-holding amounts of soybean meal, corn and iron ore futures contracts in March, July and November have grown steadily, and their liquidity has been gradually improved. In recent days, in particular, the trading scales of the 1807 contracts of these 3 products has shown great increases; their price continuity strengthened; and their liquidity and market investors’ attention have both been remarkably enhanced.
Continuous activeness brings more convenience to the industry
Market participants generally believed that DCE’s measures of promoting the continuous activeness of futures contracts have achieved preliminary results, gradually satisfied entity enterprises’ need of hedging through recent-month contracts, and brought more convenience for entity enterprises and investment institutions to deeply participate in futures market. And the futures market’s capacity of serving the real economy has been further enhanced.
Hangzhou CIEC Minerals Co., Ltd. has a strong need on iron ore futures and other financial derivative instruments. An official of the company introduced that according to traditional trading pace, the company’s circulation circle of goods is about one month, and it should lock in cost and hedge against price risks via a futures instrument every month. “Recent-month active contracts are of great significance for the company to make better risk management,” the official said, “DCE’s introduction of the futures trading company system has offered necessary liquidity for contracts not in January, May and September. The company has started to trade contracts not in January, May and September and successfully participated in the delivery of 1803 contract of iron ore futures, whose liquidity can satisfy the hedging need of a cargo of goods. And the hedging has taken good effect.”
Next, DCE will continue to optimize the continuous activeness scheme of futures contracts on the basis of soliciting market responses and suggestions and consolidate and enhance the activeness of contracts not in January, May and September, thus offering more effective price signals and more convenient risk management instruments to the market and promoting the futures market to better display its functions and roles.
