With the approach of the official launching of the internationalization of iron ore futures, all market participants have been busy preparing for it and the preparatory work has come to the final stage. On April 20, Nanhua Futures and HGNH International held the “Salon for Overseas Professional Investors of DCE Iron Ore Product”. This is the 2nd related activity after the 1st one in Hong Kong on April 12, and the two activities have offered training to nearly 100 persons from overseas exchanges, futures companies and asset management institutions. Relevant experts of Dalian Commodity Exchange (DCE), Nanhua Futures and HGNH International have made keynote speeches on the internationalization of iron ore futures, the development of the futures industry and futures market in China and the investment strategy for iron ore.
Great attention from domestic and foreign institutions
Nanhua Futures General Manager Luo Xufeng said that currently the iron ore market is excessively supplied on the whole and the international market is increasingly complicated. Under the background of increasingly accumulated market risks, international mines, trading companies and relevant financial institutions have all paid attention to the opening-up of iron ore futures and expect that the future iron ore futures market shall provide the world with new pricing mode and risk-avoiding instrument.
At the salon, relevant expert from DCE mainly introduced the registration and recording of overseas brokers and the account-opening procedures of overseas traders. According to the “Management Measures on Business of Futures Company Member Engaging in Trading of Specified Futures Products upon Entrustment by Overseas Broker” released by DCE, the process for an overseas broker to register include 4 steps: 1. The overseas broker finds a futures company to sign the entrustment agreement with it; 2. The futures company submits written documents to DCE; 3. DCE issues the Registration Confirmation Letter; 4. The futures company fills in the application in the system, and then submit it to DCE for examination and approval.
Strict the eligibility access requirements
With regard to the accounting-opening of overseas traders, the DCE expert said that, to guarantee the smooth operation after the internationalization of iron ore futures, DCE has set up the capital requirement, knowledge test, trading experience and other eligibility access requirements for clients attempting to engage in iron ore futures trading and the account-opening institutions should check whether the client has meet the eligibility access requirements for the specified products of DCE. In particular, the individual client himself/herself and the order placer designated by the institutional client should take part in a futures knowledge test on specified products and can pass it if getting 80 scores and above. For the convenience of overseas traders to take the test, traders can choose the language of the test (in Chinese or English).
According to a relevant official of DCE, DCE will differentiate the “old and new” upon the implementation of the “DCE Management Measures on Trader Eligibility of Specified Products” (the “Measures” for short). Domestic clients that have opened an account before the implementation of the “Measures” can directly take part in the futures trading of specified products without being re-examined on its eligibility, thus bringing convenience for previous traders to involve in the market.
For overseas clients, DCE has offered two ways to participate: through a domestic futures company, or sub-entrustment by an overseas broker. For the two ways, a futures company should first close the overseas client’s trading authority after getting the trading code and open the iron ore trading authority as of the time when overseas trader can trade (at 09:00 on May 4, 2018). The trading authority for other products will remain closed.
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