Singapore 25/05/2016 - China will strengthen its oversight on commodities futures trading in the country even after its recent successful clampdown on frenzied speculation, Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC), said.
"Recently, some domestic commodities futures saw huge price volatility and trading volumes. In response, the CSRC had supervised exchanges to take risk control measures to curb over-speculation and combat illegal behaviour, which has had a notable effect," Fang said at a conference at the Shanghai Futures Exchange (SHFE) on Wednesday.
"Various commodities futures exchanges are to pay close attention to the market situation, strengthen regulatory and enforcement efforts to crack down on illegal activities," he added.
In April, SHFE introduced measures including raising trading fees and shortening night-time trading hours to cool speculation in its rebar contract. Speculators - betting on an improving domestic steel sector in a strengthening Chinese economy - had sent its rebar trading volume and prices through the roof to hit trading limits on consecutive days.
A total of 91.62 million lots of rebar contracts on the exchange had changed hands in the week of April 18, up from 73.28 million lots in the previous week. Some 23-24 million lots changed hands on each day over April 21-22.
The measures appear to have had the desired effect - trading volume and price volatility in rebar have since eased. Some 45.29 million lots of SHFE rebar contracts were traded in the week of May 16.
Some market participants had wondered if the clampdown could be extended to the SHFE's non-ferrous metals futures contracts but most believe this is unlikely because trading volumes and price volatility of the base metal contracts have not reached the extent of those of the rebar contracts.
China's ability to maintain an orderly futures market is seen as important to Chinese regulators - the country wants to open up its commodities futures market further to foreign investors to have a bigger say in pricing commodities in the global market.
(Editing by Mark Shaw)