PRODUCT


Risk Mannaergmrnt


Margin

1.Pre-order check for margin sufficiency;

2.A certain percentage of the contract national instead of a fixed amount

3. adjust the trading margins based on the market conditions (before long holiday,volatile market conditions condition, etc.)

Different margin rate between general month


Price limit

Maximum price ranger for futures contract in each trading session.

Measured in percentage against the settlement price of the previous day

Different price limit for delivery month and other months

DCE may adjust price limits based on the market conditions.

When markets hit the price limit, the price limits will be expanded automatically on the next trading day.

Trading limit

Aim to prevent excessive speculation

The maximum amount of trading volume for a certain contract for members or client specific by the exchange in a certain period.

Only apply to the position opening, not liquidation

Only apply to speculative trading, but not hedging

Measures against trading limit breach: verbal warning request of information reporting, request of submitting a written promise,list on regulatory list, suspension of opening for trading


Large Trader Position Reporting

A large trader position report shall include information such as funds, open interests, delivery intention, and other information as prescribed by the Exchange. 

The Exchange shall impose forced position liquidation, if:

1. the clearing deposit balance of a Member recorded on any of the internal ledgers at the Exchange,  which are whether to serve its own Clients or its authorized clearing entities, falls below zero (0), and the Member fails to meet the margin requirement within the specified time limit;

2. the open interest of a Non-FF  Member, an OSNBP or a Client exceeds the applicable position limit;

3. a Non-FF  Member, an OSNBP or a Client fails to round the positions held in a futures

4. contract to multiples as required within the specified time limit, or is not qualified to conduct delivery for matured contracts in its possession;

5. a violation of the Exchange's rules occurs that warrants a forced liquidation;

6. any emergency happens that warrants a forced position liquidation; or

7. any other conditions exist that makes the forced position liquidation necessary.


Forced Position Liquidation

 The Exchange shall impose forced position liquidation, if:

1. the clearing deposit balance of a Member recorded on any of the internal ledgers at the Exchange,  which are whether to serve its own Clients or its authorized clearing entities, falls below zero (0), and the Member fails to meet the margin requirement within the specified time limit;

2. the open interest of a Non-FF  Member, an OSNBP or a Client exceeds the applicable position limit;

3. a Non-FF  Member, an OSNBP or a Client fails to round the positions held in a futures

4. contract to multiples as required within the specified time limit, or is not qualified to conduct delivery for matured contracts in its possession;

5. a violation of the Exchange's rules occurs that warrants a forced liquidation;

6. any emergency happens that warrants a forced position liquidation; or

7. any other conditions exist that makes the forced position liquidation necessary.


Risk Warning 

The Exchange applies price limits. The price limit for each listed futures contract shall be prescribed by the Exchange.

1. same-direction price limit occurs for consecutive trading days; 

2. a long public holiday is approaching;

3. the Exchange, in its discretion, determines that the market risk is increasing; and/or

4. other circumstances the Exchange deems necessary to adjust the price limit in a market.


Mandatory Tear-up

One of the last risk mitigation measures when the price of a contract hits price limits in the same direction for 3 times.

The exchange shall publish a notice to investors if decided to do so.

The clients who have satisfied the loss conditions and post liquidation orders at the limit price.

The exchange will match the qualified profitable losing clients.

The liquidation is conducted at the relevant limit price.