On 9th November Dalian Commodity Exchange (DCE) issued two notices, announcing to adjust the trading margins of the metallurgical coke and coking coal futures and the non-intraday trading fee for the iron ore futures, and implement the trading limit system for the metallurgical coke and coking coal futures, which stipulates that the positions of a single futures product taken by a non-futures-company member or client in a single day should not exceed 1,000 contracts, but the positions taken for the hedging trading are not subject to this limit.
According to the “Notice on Adjusting the Margin Rate of the Metallurgical Coke and Coking Coal Futures and the Trading Fee Rate of the Iron Ore Futures”, as from the settlement on November 10, 2016, the rate of the minimum margin for metallurgical coke and coking coal futures shall be increased to 13%; starting from the settlement on November11, the rate shall be increased to 15%; as from the trading on November 11, 2016 (that is, the after-hours trading on the November 10), the non-intraday trading fee rate of the iron ore futures shall be adjusted from 0.006% to 0.012% of the transaction amount, and the intraday trading fee rate shall remain unchanged at 0.03%. According to the “Notice on Implementing the Trading Limit System on the Metallurgical Coke and Coking Coal Futures”, after the market closing on November 11 (starting from the after-hours trading on the night of November 11), the intraday amount of positions of a single futures product of metallurgical coke or coking coal opened by a non-futures-company member or client shall not exceed 1,000 contracts. Specifically, The intraday amount of positions refers to the sum of the long and short positions of all contracts of a certain futures product taken by a non-futures-company member or client on a certain trading day. The notice stressed that the amount of hedging positions taken is not subject to the limit. The related accounts under common control shall be treated as one account.
DCE issued a notice in May this year, announcing to introduce the “trading limit system” in the “Measures of DCE for Risk Management”, and the trading limit refers to the maximum quantity set by DCE for the positions of a certain contract that can be taken by a member or client in a certain period of time. The system provides that “DCE can, according to the market situations, set trading limits on different listed futures products and contracts for some or all members and clients, and the specific standards shall be announced by DCE separately.” Coupled with the margin system, the price limit system and the position limit system, the trading limit system can further improve the capacity of the market for frontline regulation, elevate the level of preventing and controlling market risks and propel the steady development of the futures market. The “Measures of DCE for Risk Management” stipulates that “For the non-futures-company members or clients exceeding the trading limits, DCE can take measures such as reminding them on telephone, requiring them to report the situations, requiring them to submit written commitment, including them in the list of key regulatory targets and temporarily banning them from opening positions.” The newly issued notice also specifies the punishments for the cases of exceeding the trading limits, ruling that when the amount of the positions opened by a non-futures-company member or client on a certain trading day exceeds the trading limit, DCE will temporarily ban them from opening positions on the futures product on the day; when the trading limit is exceeded for more than 1 trading day, starting from the following trading day, DCE will ban them from opening positions on the futures product for 3 trading days; serious cases shall be treated on the basis of the “Measures of DCE for Dealing with Violations”
A DCE official said that in order to implement the system, DCE took several months to carry out research and demonstration as well as strict analysis of the clients’ trading data, and fully considered the impact of the implementation of the system on the market operation.
