China set for launch of crude oil futures

Chinese institutions are preparing for the launch of yuan-denominated crude oil futures, a move seen to give the country greater pricing power over commodities, the official Xinhua news agency reported.

Trading of the crude oil futures contracts will start on March 26 at the Shanghai International Energy Exchange, or INE.

The trading margins for the futures futures have been set at 7 percent of the contract value, the INE said in a statement.

The upward and downward trading limits will be 5 percent, with the trading limits on the first trading day set at 10 percent of the benchmark prices, Xinhua reported.

The INE will release the benchmark prices one trading day before the launch of the futures.

“All institutions concerned should get ready for the launch of the crude oil futures, strengthen risk prevention, and ensure stable operation of the market,” the exchange said in the statement.

China Securities Regulatory Commission announced the launch of the crude oil futures in February.

Preparations are almost complete, and there have been several system tests ahead of the launch, Xinhua said, quoting analysts as saying that

Shanghai crude will be able to compete for the crude price benchmark in the Asia-Pacific region, hopefully becoming part of the 24-hour global trading system together with Brent and WTI futures.

The Asia-Pacific region has surpassed America and Europe in crude consumption, but a benchmark with high recognition is still missing, Xinhua said, pointing out that China was the world’s second largest oil consumer after the United States.

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