As one of the early listed futures varieties in China, copper futures will soon start the internationalization journey of non-ferrous metal futures. On November 11, the last issue of Energy announced the international copper futures contract and relevant rules, taking a critical step before the official listing.
Matters related to the listing of international copper futures
According to the notice issued by Energy in the last issue, international copper futures will be listed and traded from November 19, 2020 (Thursday). At 08:55-09:00 on the same day, the auction will be held and the market will open at 09:00.
The listing contract is BC2103, BC2104，BC2105，BC2106，BC2107，BC2108，BC2109，BC2110，BC2111。 The benchmark listing price shall be announced by the Energy Center on the trading day before listing.
In terms of trading time, from 09:00 to 10:15, from 10:30 to 11:30 and from 13:30 to 15:00 every Monday to Friday, continuous trading time is from 21:00 to 01:00 the next day. No transaction shall be conducted during the continuous trading period of the first working day (excluding Saturday and Sunday) before the legal holiday.
In terms of trading margin and trading limit range, the trading margin is 8% of the contract value; The range of up and down limit is ± 6%, and the range of up and down limit on the first day is twice that.
It is worth noting that overseas special non brokerage participants and overseas customers can use foreign exchange funds as margin. If foreign exchange funds are used as margin, the central parity rate of the RMB exchange rate on the current day published by the China Foreign Exchange Trading Center is used as the benchmark price for market value verification. Currently, the Energy Center stipulates that the foreign exchange currency that can be used as margin is US dollars, and the discount rate is 0.95. The market value of foreign exchange funds before the closing of the market on the current day shall be calculated according to the middle rate of the RMB exchange rate of the current day published by the China Foreign Exchange Trading Center on the previous trading day. At the time of daily settlement, the benchmark price of foreign exchange funds used as margin shall be re determined according to the above method and the discounted amount shall be adjusted.
In terms of position announcement, when the position of a contract after closing reaches 15000 (unilateral), the Energy Center will announce the trading volume, buying position and selling position of the top 20 members of futures companies and foreign special brokerage participants in the contract in that month.
International copper futures contracts and relevant rules
According to the reporter, the content of the international copper futures contract and relevant rules officially released this time is consistent with the version for comments released on October 16, and the following three points deserve attention:
First, the price of international copper futures does not include VAT. The trading unit of the contract is 5 tons per hand, the minimum price change is 10 yuan per ton, the range of the limit of rise and fall is ± 3% of the settlement price of the previous trading day, the minimum trading margin is 5% of the contract value, the contract delivery month is January December, the delivery date is five consecutive trading days after the last trading day, and the delivery unit is 25 tons.
Second, the international copper futures and the Shanghai Futures Exchange copper futures are consistent in the determination of trading units, quotation units, minimum price changes, contract months, trading hours, last trading days, delivery units, delivery settlement prices, etc.
Third, there are differences between International Copper Futures and Shanghai Futures Exchange in terms of price meaning, delivery grade, delivery method, delivery date, position limit at different stages of operation, transaction code, etc. In terms of delivery grade, the delivery standard of international copper futures is in line with the provisions of national standard GB/T467-2010 for Grade A copper, or BSEN1978:1998 for Grade A copper; In terms of the position limit ratio and position limit of general positions in different stages, in order to effectively prevent and control risks, the position limit of international copper futures has narrowed compared with that of copper futures in the previous stock exchange at the initial stage of contract listing. The person in charge said that the forward-looking and prudent design ideas would help the international copper futures to operate smoothly and function well in the initial stage of listing.
The first international futures contract planned to operate in the "double contract" mode in China
International copper futures is the first international futures contract in China to be operated in the "double contract" mode. The overall design idea is to list international copper futures in the last energy market in a specific variety mode on the basis of keeping the copper futures of the last exchange unchanged, that is, the "double contract" mode.
The relevant person in charge of energy in the previous period told the reporter of Futures Daily that the "double contract" model is based on the new business launched in the bonded market and the international market without changing the existing domestic market pattern, which is conducive to the orderly development of new business on the premise of ensuring the smooth operation of the copper futures contract in the previous period.
"On the one hand, SSE copper futures are based on the tax inclusive market within the customs territory, reflecting the supply and demand relationship in the domestic market, and its price has become the pricing benchmark of domestic spot trade; on the other hand, international copper futures are facing the tax exclusive market outside the customs territory, reflecting the supply and demand relationship in the international market," he explained.
He said that in order to ensure the smooth operation of international copper futures, Last Energy always took serving the real economy as the starting point and end result of all its work, carried out in-depth market research and research on international copper futures, and formulated targeted trading, settlement, delivery and risk control measures to promote the smooth listing and stable operation of international copper futures.
Specifically, first, according to the overall risk control requirements and the characteristics of different stages of contract operation, scientifically set up the limit of price and margin system to effectively prevent transaction risks; The second is to reasonably set up the speculative position limit system, and implement the approval system for hedging trading positions; Third, according to the market development, expand deliverable resources, reasonably arrange delivery warehouses, and effectively prevent delivery risks; Fourth, carry out in-depth investor education at multiple levels to ensure the healthy and stable operation of international copper futures.
For various participants in the international copper futures market, he suggested that investors should fully understand the risks of participating in futures trading, be familiar with international copper futures contracts and relevant business rules, and rationally participate in futures trading; The upstream and downstream enterprises of the copper industry chain should understand, be familiar with and master the rules of the futures market, and constantly improve the level of hedging using the futures market in practice; Member units shall fully understand and master the laws and regulations of the futures market, achieve compliance operation and risk control, and help investors make full use of international copper futures hedging, price discovery and other functions to serve the real economy.
It provides a new risk management tool for the industry
In the opinion of Ge Honglin, secretary of the Party Committee of China Nonferrous Metals Industry Association, the launch of the last Energy International Copper Futures has provided a new risk management tool for Chinese and even global copper industry chain entities, further met diversified risk management needs, and provided the industry with transparent and fair international market prices denominated in RMB, It has made contributions to the high-quality development of China's nonferrous metal industry. He hoped that in the future, SSE would continue to focus on the interaction between the future and the present and the integration of industry and finance, and steadily promote the internationalization process of non-ferrous metal futures.
"China is a major producer, consumer and importer of refined copper. It is expected that the Far East market represented by China will continue to contribute major growth in copper production, consumption and trade in the future." Paul White, Secretary General of the International Copper Research Group, said that the international copper futures launched by Energy in the last period will help global investors to participate in the formation of the "Shanghai price", So as to further enhance China's international influence in the global copper industry. At the same time, he also expects the International Copper Research Group to continue to strengthen cooperation with the previous Energy and Institute.
As an important copper enterprise in China, Xu Changning, the head of futures business of Tongling Nonferrous Metals Co., Ltd., believes that the introduction of the last Energy International copper futures has added "sharp tools" to the hedging toolbox of copper enterprises. Its characteristics of net price trading and bonded delivery have reduced the enterprise's cost of value preservation and avoided the risk brought by the change of value-added tax rate; The RMB pricing mode adds a new option for spot settlement of enterprises in the future import and export trade process, effectively reducing exchange rate risk; The international platform enables global investors to fully participate in the formation of Shanghai copper price, which helps to enhance its international influence.
Zhang Jianhui, manager of the futures management department of Yunnan Copper Co., Ltd., also said that the listing of international copper futures has added a market option for copper smelters to process and re export copper products. Enterprises can compare the prices of domestic copper futures "double contracts" and LME copper futures and select the most favorable quotation for spot trading. In addition, the RMB pricing mode of international copper futures is very convenient and the delivery process is shorter, which avoids the foreign exchange risk of domestic enterprises in transactions, and also helps to reduce costs.
"The introduction of international copper futures will help to increase the influence of China, the world's largest copper consumption market. In particular, if foreign mines, smelters and traders can agree on the benchmark quotation as the price of international copper futures contracts in spot contracts in the future, it will have a significant impact on domestic and foreign copper spot transactions, which is very meaningful to enhance the price influence of Chinese copper." Zhang Jianhui said.
Wei Lai, chief metal analyst of COFCO Futures Co., Ltd., said that after the listing of the last Energy International Copper Futures, it not only provided more target varieties and arbitrage opportunities for China's copper import transactions, but also made the import transactions of real enterprises more convenient and accurate. At the same time, it would further enrich the structure of market participants and improve the functions of the futures market in serving entities and price discovery.
On the one hand, since the international copper price theoretically includes LME copper price, premium in the bonded area and RMB exchange rate, using international copper futures for import transactions can not only maintain the value of the price itself, but also lock the premium in the bonded area to a certain extent to avoid the risk of premium fluctuation, which was difficult to lock up before, This is of great significance to import enterprises.
On the other hand, enterprises can also use international copper contracts to lock exchange rate risk and avoid exchange rate exposure, which greatly reduces the cost of locking exchange rate through other ways. For some enterprises that previously hoped to participate in import transactions but were restricted by qualifications, foreign exchange and other factors, the listing of international copper has provided convenience for these enterprises to participate in import transactions, which has not only avoided the relatively cumbersome trading system and expensive transaction costs of overseas platforms, but also solved the problems of foreign exchange lines, overseas channels and so on, This will further enrich the structure of market participants.
Wu Kunjin, a copper researcher of Minmetals Jingyi Futures Co., Ltd., also believes that the listing of international copper futures not only provides a new hedging tool for copper enterprises to help them more effectively avoid the risk of fluctuations in internal and external price differences, but also provides a better platform for foreign investors and copper enterprises to participate in China's copper futures market. In addition, the launch of this contract is also conducive to accelerating the internationalization of the domestic futures market and enhancing China's price influence in the global copper market. Finally, pricing and settlement in RMB is also conducive to promoting the international use of RMB and promoting the internationalization of RMB.
(From Futures Daily, reporter Dong Yifei)
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