Futures Daily: Contract Specifications and Detailed Regulations of Crude Oil Futures Officially Launched

Updated on May 12,2017

Shanghai International Energy Exchange: Launch in 2017

Reported by QUE Yanmei, Journalist of Futures Daily

Product	Medium Sour Crude Oil
Contract Size	1000 barrels per lot
Price Quotation	(RMB) Yuan per barrel (no tax or duty included in the quotation)
Minimum Price Fluctuation	0.1 Yuan / barrel
Daily Price Limits	±4% from the settlement price of the previous trading day
Listed Contracts	Monthly contracts of recent twelve (12) consecutive months followed by eight (8) quarterly contracts.
Trading Hours	9:00-11:30 a.m., 1:30-3:00 p.m. (the Beijing Time), and other trading hours as prescribed by the Exchange
Last Trading Day	The last trading day of the month prior to the delivery month; The Shanghai International Energy Exchange is entitled to adjust the last trading day in accordance with the national holidays.
Delivery Period	Five (5) consecutive trading days after the last trading day.
Grades and Quality Specifications	Medium sour crude oil with the quality specifications of API 32.0 degrees and sulfur content 1.5% by weight. The deliverable grades and the price differentials will be stipulated separately by the Shanghai International Energy Exchange.
Delivery Venues	Delivery Storage Facilities designated by the Shanghai International Energy Exchange
Minimum Trading Margin	5% of contract value
Settlement Type	Physical delivery
Product Symbol	SC
Listing Exchange	Shanghai International Energy Exchange

On May 11, Shanghai International Energy Exchange (hereinafter referred to as INE), a subsidiary of Shanghai Futures Exchange, officially released the INE Articles of Associations, INE General Exchange Rules and 11 detailed rules and regulations pertaining to the proposed crude oil futures.

Crude oil futures is the first CSRC-approved specialized product in mainland China and both overseas traders and brokerage firms are able to participate in its trading according to law. The fundamental framework for overall proposal is described as “international platform, net price trading, bonded delivery and RMB denomination”. In light of the actual operation situation in Chinese futures market and the efforts made in opening wider to the outside world, crude oil futures is intended to establish a regulatory system that not only complies with the rules and regulations of China’s futures market, but also contains the universal practices in the international market, so as to gradually develop it into a market-driven and multi-layered regulatory framework, and to facilitate the market-oriented reform in oil industry and provide risk management tools for enterprises along the entire oil industrial value chain, as well as traders at home and abroad.

According to information, INE has been adhering to the principles of Openness, Fairness and Impartiality, and the rules of “Internationalization, Market-orientation, Institutionalization and Specialization” in the process of formulating its business rules and regulations, aiming at building an open international trading platform for energy derivatives. With the support of relevant authorities of the State Council, methods of cross-border money transfer have been worked out for the crude oil futures, so as to realize the integration between domestic and global markets. Firstly, a full play has been given to the financial policy innovations regarding cross-border usage of RMB and administration on foreign exchange, and as stipulated, crude oil futures will be denominated in RMB and will accept foreign exchange as its trading margin. Secondly, both direct and indirect trade accesses are available for foreign investors to facilitate them in the trading. Thirdly, the role of INE as a central clearing counterparty should be made clear to guarantee the market stability.

According to the person in charge of INE, INE shall make further efforts in the next stage to prepare proactively and prudently well for the contract listing based on the rules and regulations, and aim to launch crude oil futures within this year.