DCE Rolls out New Measures to Reduce Enterprises’ Hedging Cost
Date:02 April 2020

DCE releases the “Notice on Adjustments to Price Limits and Trading Margins during 2020 Qingming Festival Holidays” on March 31. The preferential measures on hedging trading margins that have been long expected by the industry are issued in a low profile.

According to the notice, after the trading is resumed on April 7, 2020 (Tuesday), from the settlement of the first trading day when the situation that the one-direction non-continuous quotation under the price limit does not occur on the contract with the largest open interests of one product, the hedging trading margins of iron ore, metallurgical coke, coking coal, No.1 soybean, No.2 soybean, soybean meal, soybean oil, RBD palm olein, corn, corn starch, polished round-grained rice, egg, LLDPE, PP, PVC, EG, EB and LPG futures shall be the same with their price limits. Previously, the hedging trading margins of the 18 products were the same with the arbitrage margins, which are 1 or 2 percentage points higher than their price limits.

This represents another key measure of DCE to support enterprises’ hedging and reduce their risk management costs. DCE has reduced the hedging trading fees by 90% since March 2 and exempted industry clients in Hubei Province from all hedging trading fees, which has relived the financial pressure of enterprises involved in the futures market. The adjustments to the hedging trading margins will facilitate industry risks management, support the orderly work and production resumption, and boost the recovery of the real economy.

A DCE official says that DCE, futures companies and developers of all trading and settlement systems have made full preparations for implementing the differentiated trading margins measures. DCE will uphold the goal and mission of serving the real economy and market participants, and it will continue to optimize the trading margins system, further reduce the market cost while preventing market risks and maintaining stable market operation, and keep improving the futures market’s capacity of serving the real economy.

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