The long-expected futures & options portfolio margin business of Dalian Commodity Exchange (DCE) has been officially launched from the settlement on June 6, 2019. It was learnt that DCE made automatic portfolios on market positions according to the new business parameters on the settlement of that day, and the trading margin of RMB 270 million has been released through the new policy. Effectively reducing the occupation of funds, the futures & portfolio margin business is of great significance for enhancing the operation efficiency of the futures market and improving its capacity of serving the real economy.
DCE first launched the arbitrage margin discount business on July 12, 2013, which supported the futures spread strategy, the futures inter-product strategy and the futures locking strategy. The trading margin of over RMB 2 billion was released on that day. With the continuously-increased products supporting the above three strategies, the portfolio margin of RMB 6 billion was released every day before the launching of the futures & options portfolio margin business. The implementation of the business has furthered the development of the portfolio margin business of DCE and realized the full-coverage of instruments, time intervals and positions.
First, the portfolio strategies have covered two instruments: futures and options. On the basis of the original three strategies for futures, three portfolio strategies involving options have been newly added: the selling options & futures strategy, the straddle strategy and the strangle strategy. At this point, DCE supports 6 portfolio strategies, which is the most among all exchanges in China. Second, apart from the two ways for clients to enjoy portfolio margin discounts during trading session (through the arbitrage order during trading sessions or DCE automatically establishing portfolios of client’s positions in settlement), the portfolio application during trading session has been newly added, and the clients are allowed to retain the portfolios in settlement. In addition, as for the nature of positions allowed to take part in portfolios, hedging positions are newly included. As a result, the portfolio margin business has covered all positions nature, which will help to reduce the trading cost of industry clients.
All market participants give great supports to the futures & options portfolio margin business, and they believe that its official launch will allow options investors to involve in options trading at lower capital costs, thus remarkably reducing the trading cost in the options market. Besides, investors can choose to allow the exchange to establish positions portfolios or send portfolio strategies by themselves. Such a flexible way can satisfy the individualized demands of different clients. What’s more, investors can directly liquidate the outright positions without sending extra instructions, thus greatly reducing the operation frequency and relieving the pressure on the network and the seat’s flow rate.
A DCE official says that DCE will continue to optimize the portfolio margin system and its system construction, and it will roll out more margin portfolio strategies according to the development of the futures and options market, thus further lowering the portfolio margin standards. Currently, the exchange-end system has supported the vertical spread options portfolio, the calendar spread portfolio and the options locking portfolio. Relevant functions will be realized in the member-end system soon, thus further increasing the liquidity and activity of the market and enhancing the commodity futures and options markets’ capacity of serving the real economy.
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