Dalian Commodity Exchange: Core Clearing Method Remains Unchanged By RMB – Explanation Of Relevant Rules On Ushering In Overseas Traders Of Iron Ore Futures (III)

To adapt to the international trading practice, overseas clients are allowed to trade iron ore futures with margin in USD. But the core clearing method by RMB will remain unchanged.

Dalian Commodity Exchange (DCE) adopts the all-settlement system, in which DCE settles the accounts of futures company members and non-futures company members, and the futures company members settle the accounts of clients. After the ushering-in of overseas traders, futures company members will settle the accounts of their clients and overseas brokers, which will settle the accounts of their clients. In particular, there are 2 ways for overseas traders to take part in settlement of iron ore futures trading:

In directly entrusting a domestic futures company, the futures company signs an entrustment agreement with the overseas client and offers trading and settlement services. And the futures company should have the same settlement and risk control towards overseas clients as that with domestic clients, and it should make subsidiary account management for all clients.

In sub-entrustment by an overseas broker, DCE settles the accounts of futures company members, and the futures company members settle the accounts of their overseas brokers and the overseas brokers then settle the accounts of their overseas clients. A futures company member can set up the integral capital account for an overseas broker to carry out settlement and risk control. The overseas broker should make independent account management on the margin of each overseas client and make subsidiary account management for them.

Different from crude oil futures, there is no overseas special participant for iron ore futures. And overseas traders and brokers should conduct trading and settlement of iron ore futures through domestic futures company members.