Market parties are fully prepared for the internationalization of iron ore futures.
With the international arrival of China's iron ore futures on May 4, all parties in the market are actively promoting work preparation. At present, the overall iron ore market oversupply, the international market environment is increasingly complex. Against the background of continuous accumulation of market risks, international mines, traders and relevant financial institutions have paid attention to the opening of iron ore futures, expecting the future iron ore futures market to provide the world with new pricing models and new hedging tools for international trade. New tools to provide pricing and hedging Cargill, head of the global iron ore business PaulRuston said recently, as the global trade enterprises engaged in iron ore trade for many years, cargill since the date of China's iron ore futures market has participated in the iron ore futures trading, hedging, by means of futures tools and provide risk management services to the company. "We understand that most international mining and trading enterprises welcome the opening of China's iron ore futures and will gradually participate in the open iron ore futures market, using futures tools to guide and serve spot trade. After the opening up of China's iron ore futures, foreign industrial customers who previously could not directly participate in China's futures trading have access to the Chinese market, providing a channel for avoiding international market risks. He also believes that the opening up of iron ore futures will provide a new pricing model for international trade, and that customers in industries such as international mines have considered participating in Chinese futures trading to form more representative futures prices to guide trade pricing. The head of a trading company under a Bolivian mine also said that the company's existing iron ore varieties meet the quality standards of dachang's deliverables, and will actively participate in the future trading of dachang's iron ore futures, and hope to become an offshore iron ore delivery warehouse of dachang to further expand the Chinese market. Rock financial fintech solutions director he ding believes that the large - scale liquidity of iron ore futures will attract foreign traders. "Most industrial customers in China and abroad are facing increasingly complex market risks. Compared with other iron ore derivatives markets around the world, the iron ore futures market of dachang has been active, and sufficient liquidity can better meet the risk aversion and investment demand of overseas customers." He said. Looking forward to the development prospect of the internationalization of iron ore futures, PaulRuston believes that the most obvious change in the internationalization of iron ore futures is that it can promote the function of the discovery of futures prices to be more effective, and then optimize the existing iron ore trade pricing mechanism. "China is the world's largest consumer of iron ore, and most of it is now priced using foreign indices. After the internationalization of iron ore futures, there will be more iron ore spot trading through iron ore futures prices, which will be the trend of future global trade pricing. He said. The old and new zoned off Domestic and overseas customers to participate in the path clearly has previously announced specific varieties traders appropriateness management measures such as more than 10 international business rules, for customers to participate in futures trading of iron ore trade conditions, knowledge test, set up capital experience sexual access to appropriate conditions, such as account opening institutions need to review whether to dalian customer specific varieties appropriate entry requirements. According to the relevant business person in charge of big business institute, with the appropriate management method of specific variety trader release and implementation as the node, big business institute carries on "new old division" to the customer. Domestic customers who have opened an account before the implementation of the trader appropriateness management method can directly participate in the futures trading of specific varieties, without the need to re-examine the appropriateness to facilitate the original traders to participate in the market. At the same time, the risk level of iron ore futures is R3 in accordance with the guidelines on the implementation of institutional investor appropriateness management (trial) for futures operating institutions, which has been implemented by the cietac since July 1, 2017. According to the original system, after iron ore futures as a specific variety, the risk level was adjusted from R3 to R4. Considering that the internationalization of iron ore futures business is based on maintaining the existing iron ore futures contract and the basic system unchanged, foreign traders are introduced into the existing platform, and the relevant systems of trading and risk control are basically consistent with the existing market model, and the risks faced by market traders are not significantly increased. Therefore, on April 20, cisa issued a notice of modification, and the modified risk level of iron ore futures is still R3, and the risk level is required to be consistent before and after the implementation of internationalization. "Under the premise of keeping the market risk under control, this adjustment enables a large number of traders with C3 risk tolerance level to continue to participate in the iron ore futures trading after the introduction of foreign traders, which is conducive to maintaining the smooth transition of the iron ore futures market internationalization and reducing the impact on the original market trading." Guantong futures deputy general manager zhan xiaoxia said. For overseas clients, dazhong offers two participation paths that are directly delegated through domestic futures companies and through overseas brokerage agencies. In both of these ways, the futures company shall close its trading authority after the trading code is obtained by the overseas customer, and open the iron ore trading authority for the foreign trader when he can participate in the trading (that is, 9 o 'clock on May 4, 2018), while the trading authority of other varieties shall remain closed. As of April 20, more than 1200 times have passed the Chinese and English examinations for the suitability of iron ore futures traders, and 15 foreign brokerage firms have filed for record since the rules for the international business of dachang issued on March 27. Li yaxi, general manager of axin futures international department of China international investment corporation, told reporters that the internationalization of iron ore futures is of great significance. At present, domestic futures companies are making every effort to prepare for the internationalization of iron ore futures business, successfully carrying out IT system upgrade, setting up variety committee and introducing relevant talents, and relevant preparations have been completed, only for the formal launch of international business.
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