CSRC Approves DCE To Pilot Futures Bonded Delivery Business

Liu Xingqiang DCE President

Liu Xingqiang DCE President

Recently, the China Securities Regulatory Commission (CSRC) has approved the measures of Dalian Commodity Exchange (DCE) for implementing the pilot of the futures bonded delivery business in different steps, with the LLDPE as the first pilot product and Tianjin Dongjiang Bonded Port Area as the first pilot area.

In the related official reply, the CSRC requires DCE to formulate and improve the business rules, and effectively make all the preparations for settlement, delivery, risks control and front-line supervision, etc. so as to ensure the stable operation of the pilot of the futures bonded delivery business; strengthen communication with relevant departments and effectively implement the pilot business in steps so as to continue to perfect the processes, improve the efficiency and promote the functioning; timely sum up experiences, report the progress and make effective assessment for the pilot.

The futures bonded delivery refers to the process of carrying out delivery for the commodities as the delivery objects carried by the futures contracts under the bonded supervision in the special supervision areas or bonded supervision sites of the customs, and the business extends the area of the futures delivery from inside the customs at present to the bonded area under the customs’ special supervision, thus transforming the commodities in the bonded areas into the commodities available for delivery of domestic futures contracts.

As part of the innovation of futures products and businesses, in 2011 DCE set the research in the introduction of the futures bonded delivery business as one of the key tasks to be promoted. In the choice of the pilot product, after comprehensively comparing the foreign trade dependence, the foundation of spot trade, regulatory policies and other factors of the listed products, the LLDPE futures have been set as the first pilot product; in the choice of the pilot regions, on the basis of the existing delivery regions of LLDPE, after comparing the spot trade, storage facilities and other factors of the LLDPE in different bonded areas and considering the local governments’ support efforts, Tianjin Dongjiang Bonded Port Area has been set as the first pilot area. In the second half of last year, the General Administration of Customs agreed to DCE carrying out the pilot of the bonded delivery business for the LLDPE futures at Tianjin Dongjiang Bonded Port Area.

Currently, DCE is making preparations such as rules reviews, warehouse approval and system testing, and the relevant detailed rules for the business implementation will be announced in the near future. The pilot work is planned to proceed in steps, and at the early stage, it is planned that after the first delivery is completed for the bonded warehouse receipts, the bonded warehouse receipts will be directly transformed into the duty-paid warehouse receipts by the sellers, and later the circulation of bonded warehouse receipts will be gradually liberalized.

Market participants believe that the introduction of the bonded delivery will help draw more industrial clients and international investors to participate in trading and delivery, effectively improve the market radiation and influence, accelerate the internationalization process of China’s futures market, as well as reduce the costs for market participation and further improve the market efficiency.

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