On July 14, the Shanghai Futures Exchange and its subsidiary Shanghai Futures Energy issued an announcement to reduce the trading margin ratio of seven futures products, including crude oil, fuel oil, low-sulfur fuel oil, petroleum asphalt, natural rubber, No. 20 rubber and paper pulp. and price limit range.
According to the announcement, starting from the closing settlement on July 16, 2020 (Thursday), the trading margin ratio and price limit range of crude oil, fuel oil and low-sulfur fuel oil futures will be increased from the current 15%. and 13% were reduced to 12% and 10%. The trading margin ratio and price limit of petroleum asphalt futures were reduced from the current 15% and 13% to 10% and 8%. The trading margin ratio and price limit of natural rubber and No. 20 rubber futures were reduced to 10% and 8%. The price limit ranges were lowered from the current 11% and 9% to 8% and 6% respectively. The trading margin ratio and the price limit range of pulp futures were lowered from the current 8% and 6% to 7% and 5%.
Wang Xiao, director of crude oil research at Guotai Junan Futures, believes that this is a common and effective risk control method in mature futures markets.
According to a reporter from Futures Daily, affected by the COVID-19 epidemic after the Spring Festival, the price volatility of energy and chemical futures has fallen across the board recently after experiencing significant fluctuations in the previous few months. “Exchanges use rules and regulations flexibly to promptly lower margin ratios and price limits for chemical products, which not only helps reduce market transaction costs, but also makes it easier for entities to use the futures market to hedge risks,” Wang Xiao said.
Yang An, head of energy and chemical R&D at Haitong Futures, believes that in the face of complex situations and market fluctuations during the epidemic, the futures market has withstood the test, especially as companies’ demand for hedging in the futures market continues to increase. Under the circumstances, the market scale has steadily expanded, and the risk management role of the futures market has become more prominent.
According to the relevant person in charge of the Shanghai Stock Exchange, in this process, the exchange adheres to the principles of marketization and rule of law, strictly follows the rules, and refines risk management to ensure that risks are controllable and the market is safe. On the basis of stable operation, timely and scientific and dynamic adjustments to margin levels and price limits according to market conditions will help reduce market transaction costs, maintain reasonable market liquidity, and provide effective and reliable risk management tools and venues for real enterprises.
Regarding the timely reduction of the trading margin ratio of related products, Yang An believes that this move complies with market demand, helps maintain reasonable market liquidity, helps companies improve capital utilization efficiency, and promotes the functions of related products. play.
The relevant person in charge of Ningbo Zhongzhe Products Co., Ltd. agreed with this. “Under the influence of the epidemic, the flow of people, logistics, and capital has been blocked, and the mismatch between supply and demand has caused the industrial chain and supply chain to not operate smoothly. The exchange has lowered the trading margin ratio of related products this time, reducing the cost for industrial chain enterprises to participate in futures trading. It helps to enhance the market competitiveness of relevant industrial chains and supply chains, and plays a positive role in ‘ensuring the stability of the industrial and supply chains.'” the person in charge said.
The above-mentioned relevant person in charge of the Shanghai Futures Exchange stated that the next step of the Shanghai Futures Exchange will be to effectively perform the front-line supervision responsibilities of the market, pay close attention to changes in market conditions and development trends, and proceed from preventing and defusing risks and protecting the legitimate rights and interests of market participants. Scientific decision-making and comprehensive implementation of policies within the framework of rules will ensure the stable operation of relevant futures varieties, promote functional performance, and improve the ability and level of the futures market to serve the real economy. </p
