Rules to mitigate trading risks
Source: Bloomberg News |
December 8, 2011, Thursday
|
Print Edition
Print Edition
THE Shanghai Futures Exchange will widen trading bands and link margin requirements with daily price-movement limits as the European debt crisis and weak global growth causes increased volatility.
The daily trading limits for all contracts will be increased 3 percentage points for the day following a limit move, the bourse said in an e-mailed statement yesterday. That will rise by 5 percentage points from the original level on the third day if the price again moves by the daily limit.
Volatility of the most-active copper contract on the exchange is near the highest level since June 2009, as investors weigh the impact of the deepening European debt crisis and slowing economic growth on raw material demand. Volume for all contracts on the exchange has tumbled 52 percent in the first 11 months, the China Futures Association said, as curbs tightened on speculation.
"The contagion of the European debt crisis and sluggish global economic growth have led to higher volatility and risks in global financial markets," the exchange said. The new rules will help mitigate those risks, it said.
Margin requirements will rise by 2 percentage points more than the trading band of the following day under the rules, which become effective on December 19.
The daily trading limits for all contracts will be increased 3 percentage points for the day following a limit move, the bourse said in an e-mailed statement yesterday. That will rise by 5 percentage points from the original level on the third day if the price again moves by the daily limit.
Volatility of the most-active copper contract on the exchange is near the highest level since June 2009, as investors weigh the impact of the deepening European debt crisis and slowing economic growth on raw material demand. Volume for all contracts on the exchange has tumbled 52 percent in the first 11 months, the China Futures Association said, as curbs tightened on speculation.
"The contagion of the European debt crisis and sluggish global economic growth have led to higher volatility and risks in global financial markets," the exchange said. The new rules will help mitigate those risks, it said.
Margin requirements will rise by 2 percentage points more than the trading band of the following day under the rules, which become effective on December 19.
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