Published On: Fri, May 11th, 2012

DCE Starts Simulation Options Trading

Dalian Commodity Exchange (DCE) will launch the internal simualtion trading of commodity futures options on May 7. The confirmed varieties for the simulation trading are all the varieties traded on DCE. Rules of American options would be applied for the simulation options trading.

DCE has obtained approval for the simulation options trading from the No.1 Futures Department of China Securities Regulatory Commission (CSRC). The simulation trading would be divided into three stages. During the first stage, the simulation trading will be developed internally. Later the scope will be gradually expanded, and some members and investors will be invited. After conditions become mature, the simulation trading will be expanded to the whole market. The internal simulation trading at the first stage will continue into the second half of this year.

DCE has always put emphasis on the research and promotion of the commodity futures options trading. Currently, a mature and complete options business rule system has taken shape. The present sixth trading system has been sufficient to support the transactions of futures options. Related departments of DCE have conducted extensive and detailed preparations for the launchthe simulation trading. Conditions for introducing the simulation trading of commodity futures options have been ready.

The market insiders thought that the simulation options trading will provide an operation and practice platform of options trading for the futures market in China. The simulation options trading this time is helpful for DCE to conduct further improvement to related business rules and the technical system of the commodity futures options, favorable for the popularization of the options knowledge, convenient for market participants to understand and comprehend the business rules, investment strategies and the practices of commodity futures options, favorable for creating conditions for early launching of commodity futures options, and also conducive to accumulating experience in market operation and supervision. The development of the simulation options trading this time also marks the accelerating of the promotion work for launching of options trading on DCE.

During the two Conferences, Liu Xingqiang, Deputy to China National People’s Congress and the President and CEO of DCE, noted that according to the development experience of the agricultural product options in developed economies in Europe and America, the options trading of bulk agricultural products are of positive functions in aspects such as guiding farmers to participate in the futures market, stablizing the farmers’ income, avoiding descending risks of agricultural product price etc. As China’s commodity futures trading develops, the operation of agricultural product futures such as corn and soybean futures has been gradually mature, giving sound play of the functions and providing basis for introduction of corresponding options trading.

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