(Yicai Global) April 16 -- China will allow foreign investors to take part in domestic iron ore futures trading from next month following the completion of all related preparations, the country’s securities regulator has confirmed.
Non-Chinese brokers will be able to trade iron ore futures from May 4 on the Dalian Commodity Exchange, the first domestic listed futures market to be extended to foreigners, the China Securities Regulatory Commission said in a statement.
The opening-up of iron ore futures to foreign investors will help form an internationally recognized benchmark for futures prices and help the development of global iron ore trade.
Four overseas brokerage agencies have completed filings with the exchange as of April 11, and another seven have submitted their files for review, said Chen Wei, director of the Industrial Commodities Division at Dalian Commodity Exchange.
“The relevant supporting policies and measures for the internationalization of iron ore futures have basically been completed, and the exchange-side technical system fully supports the internationalized business,” Chen added.
Traders are the main participators in the iron ore market, while the upstream mines are not involved, though the exchange may sign long-term contracts in futures spread trading with them and make contacts to set up foreign storage, the statement said.
The original contract, basic and core technology systems, core settlement and risk control models will remain unchanged, and the trade will be settled in yuan. Foreign investors may participate through domestic futures company members and overseas brokerage agencies, according to regulations issued by Dalian Commodity Exchange on March 27.
The introduction of foreign investors should not have a big impact on the market, an iron ore researcher told Yicai Global.