June 15, 2018
Our Ref: No. 244  DCE
Dalian Commodity Exchange
To units concerned:
Dalian Commodity Exchange (DCE) plans to recruit market makers for the options on corn futures and requests the units intending to apply for the qualification of a market maker for the options on corn futures and meeting relevant requirements to submit the application documents to DCE before June 25, 2018. The specific requirements are as follow:
I. Application requirements
DCE implements market maker qualification management on options products and those applying for the market maker qualification for the options on corn futures should meet the following requirements:
1. Net asset of RMB 50 million and above;
2. A specialized agency and relevant personnel in charge of the market making business, and relevant personnel should be familiar with relevant laws and regulations on futures and options and relevant rules of the DCE;
3. Have sound implementation scheme on market making, internal control system and risk management system;
4. No records of major violation of laws or regulations in recent 3 years;
5. Have a stable and reliable technical system for market making;
6. Take part in the DCE’s activity of appraising market makers for corn options in simulation trading;
7. Other requirements of the China Securities Regulatory Commission and DCE.
II. Application documents
Those applying for DCE’s market maker for the options on corn futures should submit the following written documents:
1. The application form (Attachment 1) signed by the legal representative and stamped with the official seal;
2. The copy of the business license and the organization code certificate with the official seal;
3. The original of the latest audited financial accounting report or its copy stamped with the official seal of the accounting firm (stating the net asset or the ownership interest of the applied unit);
4. The job allocation and responsibilities of the market making department, as well as a list of relevant personnel and the head and their resumes (see Attachment 2 for the job allocation and staff information form, and the detailed resumes of the head and the key personnel for trading, risk control and technology development and maintenance should be attached);
5. The implementation scheme on market making, the internal control system and the risk management system for the applied products (The implementation scheme shall include but not limited to the overall vision, the quoting strategy, the hedging strategy, the position management, the capital management, the decision-making procedure, the basic functions of the market making system, the framework for risk management and internal control system and the emergency plan; the internal control scheme shall include but not limited to the business management, the decision-making procedure, the capital management, the business isolation mechanism, the compliance and internal regulation, the job allocation and responsibilities, and relevant working procedures; the risk management system shall include but not limited to the risk control measures, the business risk management, the market risk management, the operational risk management, the technical system risk management and relevant testing reports);
6. The Letter of Commitment for no records of major violation of laws and regulations in recent 3 years (Attachment 3);
7. The illustration on the technical system for market making;
8. The illustration on the market making for the trading or simulation trading of options (including but not limited to the information on taking part in DCE’s simulation trading for options, the award-winning and certifications of relevant appraisals, and the information on providing mobility for the options trading or simulation trading of other markets);
9. Other materials required by DCE (the introduction of the company which shall include but not limited to its shareholders, registered capital, registered address, office address and the time of establishment; the risk management subsidiary of the futures company should submit the copy of the market making business registration letter issued by the China Futures Association and stamped with the official seal.
The market makers for the options on soybean meal futures should submit the written documents in Article 1, 3, 4, 5, 8 & 9 if attempting to apply for the market maker for the options on corn futures.
III. Requirements on documents
1. The official seal stamped on the documents should be that of the applying unit;
2. Electronic documents: submit the scanned copy of application materials in articles 1, 2, 3 and 6 and the scanned copy with the official seal on the 1st page of application documents in articles 4, 5 7, 8 and 9;
3. Written documents: all documents should be numbered in the above series and a list of materials should be attached;
4. Time and method of submitting documents: please mail all electronic documents (filename: “Market Maker Application Documents of XXX (full name of the unit)”) to DCE and send the written ones to DCE (make a call to confirm) before June 25, 2018. In particular, the illustration documents on taking part in the appraisal of simulation trading for corn futures can be supplemented before July 24, 2018.
IV. Review process
1. General review
The general review includes two parts – preliminary review and final judgment.
1) Preliminary review
a. Format review. DCE will review the completeness of all documents. Those with incomplete documents cannot be scored in the preliminary review and those with insufficient net asset cannot take part in the simulation trading appraisal.
b. Simulation trading appraisal (Attachment 4). The applying unit should practice in DCE’s simulation trading for corn options and take part in the appraisal. Otherwise, it cannot participate in the following procedures.
c. Preliminary review scoring. Making preliminary scores according to the format review and the simulation trading appraisal, and confirming the applying units that can take part in final judgment.
2) Final judgment
a. Open test. The applying unit should get access to the open test platform of DCE and practice.
b. Special check. DCE will check the preparation for market making of the applying unit.
c. Spot argumentation. DCE will organize the applying units for site argumentation and make an overall score according to the special inspection, open test and spot argumentation. The market maker qualification for the options on corn futures will be determined according to the scores.
2. Review for the market makers for the options on soybean meal futures
For market makers for the options on soybean meal futures, DCE will determine their qualification according to their ranking among all market makers for soybean meal options in 2017 and their application documents.
The final list of market makers for the options on corn futures will be released to the public.
Address: Room 711, Futures Building, No. 129 Huizhan Road, Shahekou District, Dalian City
Attachment 1: Application Form of Options Market Maker of Dalian Commodity Exchange
Attachment 2: Form of Job Allocation and Staff for Market Making
Attachment 3: Letter of Commitment
Attachment 4: Arrangement for Carrying out Appraisal for Market Makers in Simulation Trading of Corn Options
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