The Dalian Commodity Exchange (DCE), a major commodity bourse in China, launched iron ore options on Monday. The move comes as the world's top steel-producing country - also the largest consumer of raw materials for steelmaking - offers more risk-hedging tools for iron ore traders and steelmakers.
Buoyed by the launch, the first for industrial commodities on the DCE, the most-active iron ore futures contract hit the daily cap of 6 percent during Monday's morning session. The DCE launched iron ore futures contracts in 2013.
The debut of iron ore options also signals the nation is ramping up efforts to build derivative portfolios.
Earlier this year, the Shanghai Futures Exchange commenced copper options trading. In 2018, the nation launched white sugar and soybean meal options.
In another major move, the Shenzhen Stock Exchange over the weekend unveiled rules for the pilot trading of stock options. Market observers believe this paves the way for MSCI to further increase A-share weighting in its global benchmarks.
During the New York-based index provider's most recent public consultation on the inclusion of A shares from September 2018 to February 2019, investors reckoned that access to hedging and derivatives instruments is among the concerns needed to be resolved before any consideration of further inclusion, a spokesperson for MSCI told the Global Times.
"Index futures and options contracts are critical risk-management tools for global investors, particularly for complex, deep and varied equity markets such as those in China."
