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To promote the preparations for the businesses of market institutions related to options market making and speed up the cultivation of the potential options market makers, on December 24, Dalian Commodity Exchange (DCE) issued the “Notice of DCE on Registration for Cooperative Test for Simulation Trading of Options Market Making”, seeking institutions to conduct the cooperative test for the options market making in the simulation trading environment.
According to the notice, the test is designed for institutions who intend to participate in the options market making business of DCE and have basically had the trading system and business teams for the market making; the product for the market making is the soybean meal option contracts; the initial fund of each market making trading code is RMB 100 million, the position limit for market making prior to the delivery month is temporarily set at 2.5 times the position limit of clients, and the specific standards for position limit for the futures and options of the soybean meal product have also been announced. The test will be conducted in accordance with the “Measures of DCE for Management of Options Trading” (Draft), the “Measures of DCE for Management of Options Market Making” (Draft) and the “Rules of DCE Related to the Cooperative Test for Simulation Trading of Options Market Making” which was made for the test on the basis of the above two measures as well as DCE’s other related futures rules. In the cooperative test, DCE will provide the market makers with the hosting environment and the Level2 quotes, which will result in more realistic experience of market making.
The notice also specifies the contents such as the arrangement for the registration process, the application modes in registration, the preparations for the technical system and hosting and the handling of violations. According to the notice, the cooperative test will be conducted after the Spring Festival of 2015, and the institutions with the intention to participate in the test are required to provide relevant registration materials before 17:00 on January 5, 2015, as well as effectively make preparations for the relevant businesses and technologies in advance.
In the process of the cooperative test, DCE will follow the market liquidity, the quotation, the operation of the technical system and other conditions at any time, gain actual understanding of the trading strategies and characteristics of market making in a fully competitive environment, and improve the supervisory scheme and indicators designing for market making according to the specific results of the test in the future work.
An official of the trading department of DCE said that the test of DCE is designed to test the designs for the market making system and the preparations for related systems. Meanwhile, the test will further promote the system development and construction of the software providers and market makers, get the systems ready for the market making business, and discover and cultivate a number of potential market makers with strength and qualification, so as to make effective preparations for the establishment and implementation of the market making system. In addition, it is hoped that the members could make full use of the cooperative test for the market making by actively organizing the clients to conduct the simulation trading of options.
