Significantly Increased Client Participation and Price Smoothness

By Li Yicheng

 

Following its success in gold and silver futures trading, the allure of continuous trading has begun to be felt in nonferrous metal futures as well.

 

The market closing on January 20 marked the completion of a full-month continuous trading of nonferrous metal futures after its launch. As of that date, the turnover of copper, aluminum, lead and zinc during continuous trading hours totaled 2.9202 million lots (bilateral, the same below), among which the turnover of copper futures amounted to 2.0056 million lots, aluminum futures 141,900 lots, zinc futures 749,100 lots and lead futures 23,600 lots. Overall, the addition of continuous trading led to constantly growing nonferrous metal futures market, significantly increased client participation and price smoothness.

 

In terms of turnover and turnover ratio, the trading size of nonferrous metal futures during continuous trading hours has reached a satisfying level. The average daily continuous trading volume of copper futures amounted to 105,600 lots, accounting for 26.32% of its average daily volume, 7,500 lots for aluminum futures, 25.84% of its average daily volume, 39,400 lots for zinc futures, 36.20% of its average daily volume and 1,200 lots for lead futures, 27.05% of its average daily volume.

 

The launch of continuous trading of nonferrous metal futures attracted more investor participation in all the commodities. Aluminum, zinc and lead futures enjoyed bigger growth. Statistically, in this month, the average daily client participation in copper futures increased by 4.76% relative to the previous month,while aluminum futures increased by 88.99%, zinc futures 113.36% and lead futures 96.49%.

 

The most important change brought by continuous trading to investors is the fact that the continuity and smoothness of the price of copper, aluminum, zinc and lead futures grows considerably and the after-hours “breakout” gap narrows significantly. In the recent month, the average difference between the opening price of copper futures and its closing price for the previous trading day decreased by 66.27% relative to the average difference for the entire 2013, aluminum futures decreased by 37.42%, zinc futures 49.09% and lead futures 44.62%.

 

Relevant heads from the Shanghai Futures Exchange says that the Exchange will try to do well in the operation and maintenance of continuous trading and its risk prevention according to its new characteristics, and improve market risk pre-research and prediction capability. Meanwhile, the Exchange will deepen the popularization of the experience and fruits of continuous trading mechanism innovation and improve market service competence to provide more in-depth and extensive price discovery and risk management services for the real economy.