Notice on Market Risk Control during the New Year’s Day 2015

Updated on Dec 24,2014

Notice on Market Risk Control during the New Year’s Day 2015

FROM: Shanghai Futures Exchange

TO: All Members, Certified Settlement Banks and Certified Delivery Warehouses

CC: General Office and Futures Regulatory Department of the China Securities Regulatory Commission

SUBJECT: Notice on Market Risk Control during the New Year’s Day 2015

FILING SERIAL: SQF [2014] No. 180

December 24, 2014

According to the Announcement on Trading Schedule during National Holidays for Year 2015 of the Exchange, the Exchange futures markets will be closed from January 1 through January 3 (holiday) and on January 4 (weekend). According to the Risk Management Rules of the Shanghai Futures Exchange, we decide to adjust the trading margin requirements and price limits for each product around the New Year’s Day.

I. In the absence of a limit-locked market on December 30, 2014, the trading margin requirements as from the market close and settlement on that day and the price limits as for the following trading day will be adjusted as follows:

For futures contracts on steel rebar and hot-rolled coil, their trading margin requirements rise from 5% to 6%, and their price limits remain as 4%;

For bitumen contracts, their trading margin requirements rise from 5% to 7%, and their price limits from 4% to 5%;

For silver and natural rubber contracts, their trading margin requirements rise from 7% to 8%, and their price limits from 5% to 6%;

In the event of any discrepancy between the above-mentioned margin requirements and price limits and the ones prescribed in existing rules of the Exchange, the higher standard shall prevail.

For futures contracts on copper, aluminum, zinc, lead, wire rod, gold and fuel oil, their trading margin requirements and price limits remain unchanged according to existing rules of the Exchange.

II. When the trading resumes on January 5, 2015, the following adjustments will be made to margin requirements for the above-mentioned futures contracts as from the market close and settlement on the first trading day when no price limit occurs, and to their price limits as for the following trading day:

For futures contracts on steel rebar and hot-rolled coil, their trading margin requirements remain as 6%, and their price limit as 4%;

For bitumen contracts, their trading margin requirements remain as 7%, and their price limit as 5%;

For silver and natural rubber contracts, their trading margin requirements remain as 8%, and their price limit as 6%;

Please refer to the Risk Management Rules of Shanghai Futures Exchange for implementation of other provisions concerning trade margins and price limits.

III. All members shall timely carry out the requirements for position limits and adjustment in multiple integrals in regard to the contracts they have open interest in, and be prepared for delivery. For FU1501 contract, the last trading day is December 31, 2014, and the delivery days are January 5, 6, 7, 8, 9 in 2015. All members shall fully understand investors’ will for delivery, inspect the number and validity period of the warrants for contract delivery in advance and do well in the declaration and issuance of designated VAT invoices to avoid delivery risks.

All members are required to do well in risk prevention, duly increase margin requirement based on investors’ position and risk level, strengthen the management over withdrawal and deposit of investor’s funds, remind investors of the importance of prudent trading and rational investment, and attach importance to technical system maintenance and IT network safety during the holiday. Certified settlement banks and certified delivery warehouses are required to ensure smooth market operation.