FUTURES DAILY: INNOVATIVE DESIGN OF IMIC FUTURES ACCLAIMED

Updated on Jun 20,2014

June 20, 2014

By Lu Shuangmei

Up to yesterday, the simulation trading system of the IMCI (Industrial Metal Commodity Index) futures of the Shanghai Futures Exchange (SHFE) has been running for one month. On the whole, the transaction process has been stable and orderly, and the technical system has been functioning well.

The IMCI futures launched by the SHFE looks to be the first commodity index futures in China, with its benchmark indexes consisting of four futures contracts: copper, aluminum, zinc and lead. Total five contracts are listed in the simulation transaction this time, namely the IM1406 (Current Month), IM1407 (Following Month), IM1408 (Third Month), IM1409 (First Quarter), and IM1412 (Second Quarter). The trading hours are 9:00 ~ 11:30 (morning session) and 13:30 ~ 15:15 (afternoon session) (closing hour 15:00 in the last trading day), night session is temporarily held on during the simulation trading period.

Up to June 18, a total of 9.317 million contracts are traded under all the contracts in the simulation transaction of the SHFE, with total contract value of RMB256.03 billion, and involving total 1,612 corporate and natural person simulation accounts.

As introduced, the simulation transaction of the IMCI futures is a necessary link in the listing process of the non-ferrous metal index futures, and the SHFE will, under uniform planning of the China Securities Regulatory Commission, actively push forward the preparatory efforts for the listing of the non-ferrous metal index futures.

Jing Chuan, Deputy General Manager of CITIC Futures, said that the IMCI futures to be launched by the SHFE will provide more hedging strategy options for real enterprises, making diversified hedging possible, and it is expected to fill up the current gap of the commodity index futures in China. For the index and index future products, due to its facility being of cash settlement, their introduction to the on-floor and off-floor derivatives markets would draw a great deal of institutional investors, consequently enhancing the fund scale and services level of the futures industry as a whole. The benchmark copper, aluminum, zinc and lead futures in the portfolio of the IMCI futures have been all along actively traded products, and the simulation transaction this time has allured a large swath of investors. Having adopted the Bo Yi Master interface with which investors are familiar, and practicing on-line registration, the simulation trading features simple operation, providing traders with great convenience.

“The launch of the simulation trading of the IMCI futures has drawn widespread market attention. As we know, all parties involved have much enthusiasm”, told Mr. Wang Fuxuan, Assistant Director of Jinrui Futures Research Institute. As to the simulation trading scheme of IMCI futures, the spotlight is its cash delivery system, and this is the biggest difference between it and other commodity futures. Comparing with traditional physical delivery, cash delivery facilitates small and medium-sized investors to control their risks and institutional investors to participate, better suiting needs of the market players. Having spent a lot of efforts in the initiative of the index futures, Jinrui Futures is now actively studying and taking part in the simulation trading of the IMCI futures.

“Comparing with commodity futures, a number of innovations are added in designing the IMCI futures. For instance, the cash settlement writes off such systems as delivery month gradient margin, and position threshold margin mark-up. In addition, the IMCI futures is also scientific in trading hours arrangement, with its closing hour 15 minutes later than that of commodity futures, which allows the investors to adjust their positions and strategies, so as to effectively control risks of investment portfolios”, said Li Qingfeng, an analyst of nonferrous metals of the Wanda Futures Industry Development Department.