DCE: Forming Globally-recognized Price Benchmark, Facilitating the Development of Global Iron Ore Trading
The China Securities Regulatory Commission (CSRC) announced on April 13 that relevant preparations for the ushering-in of overseas traders of iron ore futures have been completed and, after considering all relevant factors, the iron ore futures is to officially implement the business of ushering in overseas traders as of May 4, 2018. It means that the introducing of overseas traders of iron ore futures is to be settled.
An official of Dalian Commodity Exchange (DCE) said that the introduction of overseas traders of iron ore futures is based on the years of mature operation of iron ore futures. It will maintain the previous contract, fundamental system, core technical system and core clearing and risk control patterns and adopt the RMB-denominated settlement. Overseas traders can participate through a domestic futures-company member or the sub-entrustment by an overseas broker. The use of overseas funds refers to the management of specified products, and the physical delivery issue will be solved by bonded delivery. All these measures will bring great convenience for overseas traders. The participation in iron ore futures by both domestic and overseas traders will help to form a futures price benchmark recognized by the international community and facilitate the development of global iron ore trading.
At the Bo’ao Forum for Asia of this year, President Xi Jinping suggested that the financial industry should greatly relax the control over market access, intensity the efforts on opening-up and expand the cooperation fields of Chinese and foreign financial markets, thus opening up new perspectives for China’s opening-up. CSRC Vice Chairman Fang Xinghai believed that China’s finance will change the world. Under such circumstances, making clear the date of ushering in overseas traders of iron ore futures represents an active response to the financial opening-up of the Chinese capital market and also a direct manifestation of China’s economy involving in global economic governance.
Iron ore futures is the first listed futures product that will realize its opening-up in China, and its usher-in of overseas traders is of great significance. China is the largest iron ore import country in the world; establishing and discovering open and transparent pricing standards with broad representativeness in China together with global investors will help to guide the circulation and allocation of relevant capital of iron ore industry in the world and increase the risk-avoiding efficiency; it will also help to establish a fairer and more rational new international trading order and deeply serve the global steel industry.
A DCE official said that DCE is now preparing for the settlement of ushering in overseas traders of iron ore futures and striving to guarantee its stable launching and smooth operation. Previously, DCE has released relevant rules on ushering in traders of iron ore futures according to the principle of “self-orientation, controllable risks and gradual improvement” and by fully soliciting opinions of all market participants. And in early April, it completed the 1st full-market testing which went on smoothly and produced accurate testing results. Currently, futures companies are actively carrying out various market promotion activities and promoting the preparations for the account-opening of overseas clients and the registration, trading, delivery and other business of overseas brokers.
This official said that 2018 is the crucial year for DCE to facilitate the strategic transformation of building a diversified, open and first-class derivatives exchange in the world. On the occasion of the 40th anniversary of implementing the reform and opening-up policy in China, the introducing of overseas traders of iron ore futures marks an important step towards the opening-up of DCE and is of profound significance. DCE will continue to intensify its front-line regulation responsibility, prevent market risks and guarantee the stable implementation and smooth operation of ushering in overseas traders of iron ore futures. He stressed that by taking the opportunity of introducing overseas traders of iron ore futures, DCE will promote reform through openness and fully boost the strategic transformation, thus serving the real economy both in China and the world.
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