With the approval of the China Securities Regulatory Commission (CSRC), the Nickel Options of Shanghai Futures Exchange (SHFE) have been confirmed as a Specified Domestic Product. Accordingly, SHFE plans to fully open the nickel option market to Overseas Special Participants, Overseas Intermediaries, and overseas Clients. To this end, SHFE will make the following adjustments to the trading of nickel options.
I. Exercise and Fulfillment
Nickel options are American-style options. Non-Futures Firm Members (“Non-FF Members”), Overseas Special Non-Brokerage Participants (“OSNBPs”), and Clients should observe the following table on the timing and channel for performing various actions such as exercise and abandonment.
Table 1: Time and Channel for Exercise and Fulfillment
II. Position Limit
For the purposes of position limit, nickel option positions will not be aggregated with futures positions. For any Non-FF Member, OSNBP, or Client, the total size of long calls and short puts of any particular contract month, as well as the total size of long puts and short calls of any particular contract month, should in each case not exceed the position limit tabulated below. For the purposes of position limit, accounts linked by actual control relationship are treated as a single account.
Table 2: Position Limit for Nickel Options
III. Request for Quote
Non-FF Members, OSNBPs, and Clients may request for quote (“RFQ”) from market makers for all listed option contracts. An RFQ should specify the contract code, and RFQs for the same option contract should be spaced no less than 60 seconds apart. No RFQ may be submitted for a particular option contract when its best bid-ask spread is less than or equal to the spread shown in the table below.
Table 3: Response Criteria for RFQs on Nickel Options
IV. Options Trading Access
Account-opening institutions (i.e., Futures Firm Members, Overseas Special Brokerage Participants, and Overseas Intermediaries) must enforce trader eligibility requirements in strict accordance with the Futures Trading Participant Eligibility Management Rules of the Shanghai Futures Exchange, the Operational Guidelines for the Futures Trading Participant Eligibility Management Rules of the Shanghai Futures Exchange, and other applicable rules. Non-FF Members and OSNBPs should apply to SHFE for options trading access in accordance with the eligibility requirements for general institutional clients.
V. Miscellaneous
For option products listed on SHFE that are subsequently confirmed as Specified Domestic Products and become fully open to Overseas Special Participants, Overseas Intermediaries, and overseas Clients, their trading arrangements will be adjusted in line with the options trading guidance.
Market participants shall make necessary preparations and strengthen risk management to ensure the smooth functioning of the market.
