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Dalian Commodity Exchange Intensifies Control Over Over-Speculation

Dalian Commodity Exchange (DCE) today (the 25th) issued a notice that starting on April 26, 2016, the trading fee rate of the iron ore and PP futures will be adjusted from 0.009% to 0.018% of the turnover, and the 50% discount for the intra-day trading of the same contract of No. 1 Soybeans and LLDPE futures will no longer be implemented (with the fee restored to RMB 2 / contract). So far, since last December the number of the futures products for which DCE increases the trading fee rates or suspends the discount for the intra-day trading has been increased to 6, and the control of the over-speculation has been increasingly intensified.
 
A market participant said that with significant fluctuations, rapidly increasing trading volumes and excessively high market turnover rates of some commodity futures products, the market has shown the tendency toward over-speculation. In addition to the traditional market-based measures such as expanding price limits and increasing the minimum trading margins, DCE has also taken the initiatives such as adjusting up the trading fees and cancelling the discounts of the intra-day trading fees for the related futures products, which will undoubtedly further increase the costs for short-term trading, relatively accurately cool down the trading of relevant futures products and curb the tendency towards over-speculation. This time DCE has expanded the scope of the products in adjusting the trading fee rates, in a bid to not only step up the supervision over the previously overheated products but also guard against the recent tendency of the products toward overheated trading in a timely way as well as prevent some funds from transferring to new products for short-term speculation.
 
The market participant further pointed out that the measures taken recently by the three major futures exchanges have resulted in some effects, but the final effects are yet to be tested in the market. Currently DCE has continued to step up the supervision, showing the resolute determination of DCE to curb over-speculation and hold fast to the bottom line of risks. Therefore, if the market tendency toward over-speculation is not lessened or picks up, DCE may adopt further regulatory measures.

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