Shanghai Futures Exchange moves to levy fees on same-day trading

[SHANGHAI] The Shanghai Futures Exchange, one of the world's top metals bourses, is from Tuesday charging fees for closing nickel positions on the same day they are opened, part of a series of measures by China to curb speculation in futures markets.

Fees will also be introduced for same-day settlement of silver and bitumen futures, the exchange said in a statement. The levy for nickel is 6 yuan per contract, for silver it's 0.005 per cent of the value of the trade and for bitumen 0.003 per cent of the value, according to exchange regulations.

The move is to "prevent excessive speculation and strengthen regulations," the bourse said in an e-mailed response to questions. Margin requirements for nickel and bitumen will be raised to 8 per cent from 7 per cent from Oct 8, while trading bands will be widened to 6 per cent from 5 per cent, it said in the statement Monday.

China is clamping down on market speculation after an equities rout wiped out trillions of dollars of market value. Securities regulators are investigating traders, fining brokerages and limiting trading of stock-index futures. Commodities exchanges are also considering changes to rules on "program trading," according to people with knowledge of the plans.

"Some trading houses specializing in program trading chose nickel and bitumen futures in Shanghai as a replacement for stock-index futures," said Celia Wang, general manager in the investment department of trading house Tianjin Zhongwei Group. "These changes increased trading volumes and volatility."

Aggregate daily volume in Shanghai's nickel futures has doubled since Sept. 8 and reached its highest level last week at 1.68 million tons, exchange data show, while aggregate open interest climbed 6.8 per cent to 300,000 tons.

BLOOMBERG