Date
24 September 2017
On some days, the trading volume in iron ore futures on the Dalian Commodity Exchange exceeded China's total imports of iron ore last year. Photo: China Daily
On some days, the trading volume in iron ore futures on the Dalian Commodity Exchange exceeded China's total imports of iron ore last year. Photo: China Daily

China securities regulator cracks down on speculation in futures

China’s securities regulator ordered the country’s major commodity futures exchanges this week to control speculative trading activity after a surge in prices sparked fears of a boom-and-bust cycle, Reuters reported.

In response, commodity futures exchanges in Dalian, Shanghai and Zhengzhou ordered major institutional investors that lack a commodities background to rein in their trading, the report cited unnamed sources as saying.

Investors, including hedge funds and retail investors, have placed big bets on Chinese futures this year, driving up contracts in commodities such as iron ore, rebar, cotton and even eggs.

The rally has prompted many analysts to warn of similarities to a boom in the country’s stock markets, which reversed into a sharp crash last summer.

The exchanges have made several public announcements this week of measures that increase the cost of trading, such as a rise in transaction fees and minimum margin requirements, action that has taken some of the heat out of the rally and trading volumes.

Market trading limits have also been widened.

At their peak this year, Dalian iron ore had risen 73 percent, and Shanghai rebar 62 percent.

On some days, the trading volume in iron ore futures on the Dalian exchange exceeded China’s total imports of iron ore last year.

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RC/FL

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