DCE Officially Releases Rules for RBD Palm Olein Options Contracts and Related Parameters
Date:16 June 2021

Dalian Commodity Exchange (DCE) released on June 9 the Announcement on Releasing the RBD Palm Olein Options Contract and Amendments to the Relevant Rule of Dalian Commodity Exchange, and the Notice on RBD Palm Olein Options Trading and Overseas Investors’ Participation, officially announcing the rules for RBD palm olein options contracts. It also made clear that RBD palm olein options, which is the first options listed on China's mainland to overseas investors, would be officially listed on DCE on June 18.

It is reported that DCE had publicly solicited opinions from the market regarding options contracts and relevant rules for RBD palm olein on May 11. The design of the contracts and relevant rules were generally recognized in the market. It was believed that the contract terms, which are reasonably designed, can meet the market’s needs and allow market players to understand and participate in the trading.

According to the Announcement on Releasing the RBD Palm Olein Options Contract and Amendments to the Relevant Rule of Dalian Commodity Exchange, the same set of rules is applicable to both RBD palm olein options and other options listed on DCE, for which the contract design principle is fundamentally consistent. In terms of trading, settlement and risk management, overseas investors can participate in RBD palm olein options in the same path as existing specific products are traded. The basic system, core technical system, clearing system and risk management system remain unchanged. Overseas investors can use RMB, standard warehouse receipt, China’s government bond and foreign currency funds as margin. By taking into account the actual operation of the RBD palm olein futures market, DCE has made specific design in terms of exercise price intervals and tick size, so as to promote the healthy and stable operation of the market.

According to the Notice on RBD Palm Olein Options Trading and Overseas Investors’ Participation, DCE will list and trade RBD palm olein options contracts from the day trading session on June 18 and carry out night trading session. The contract months for the first batch of RBD palm olein options to be listed are September-December, 2021 and January-June, 2022, involving a total of 10 options contracts series. Like other options listed on DCE, only limit order and stop limit order are  available at the initial phase of listing of RBD palm olein options contracts, and the maximum quantity of orders each time is 1000 lots, which is the same as that for the underlying futures contract. The position limit is 10,000 lots at the initial phase of listing.

In addition, the notice also specified the listing benchmark prices, exercise and fulfillment, foreign currency as margins, related fees and quotation inquiry.

Market players said that promoting the development and listing of RBD palm olein options, and opening to overseas investors is another important step for the futures market in China to serve the global real economy, which will further enhance the capability and level of China's futures market to serve the global industry chain.

It is reported that RBD palm olein futures were listed on DCE in 2007, which is the first futures for purely-imported commodity in China. Since its launching more than a decade ago, the market has been operating steadily and DCE has become the world’s largest RBD palm olein futures market. In 2020, the average daily trading volume of RBD palm olein futures of DCE reached 1.3 million lots, equivalent to 13 million MT, with an average daily open interest of 510,000 lots, equivalent to 5.1 million MT. Trading volume ranked second in the global agricultural futures and options market. On December 22, 2020, overseas investors were allowed to trade RBD palm olein futures, and the international influence was expanding gradually. All the players in the market expected RBD palm olein options to be listed and overseas investors to get involved in the trading, so as to better satisfy the needs of refined risk management of global industrial enterprises.

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