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HKEX plans iron ore futures contract, targets November roll-

  • Sep.28,2017
  • Source: chemnet

Hong Kong Exchanges and Clearing plans to introduce a cash-settled iron ore futures contract, with roll-out tentatively set for November this year, "subject to market readiness," the exchange group said Wednesday.

The contract, settled against the TSI Iron Ore FE 62% Fe CFR Tianjin Index provided by S&P Global Platts, will be HKEX's first ferrous metals product and will complement its existing precious and base metals products, the company said.

The London Metal Exchange, a subsidiary of HKEX, already has cash-settled ferrous scrap and rebar contacts which settle against Platts/TSI indices.

"With the benefits of electronic trading, our planned iron ore futures will provide a transparent and efficient risk management and investment tool for physical and financial users who want to hedge their price risk or gain exposure in iron ore," said Li Gang, HKEX's co-head of market development, in a statement.

Proposed specifications for the new contract, which will trade both monthly and quarterly, are as follows:

Contract Size: 100 mt

Trading Currency: US dollars

Price Quotation: US dollars and cents per mt

Contract Months (Monthly): Spot month and the next 23 calendar months

Contract Months (Quarterly): Spot quarter and next seven calendar quarters

Minimum Fluctuation: $0.01/mt (no maximum fluctuation)

Trading Hours (HK time): 9:00 am to 4:30 pm (day trading session) and 5:15 pm to 1:00 am (after-hours trading session)

The final settlement price of the monthly contract will be the arithmetical average of all TSI Iron Ore Fines 62% Fe CFR China Index values published in that contract month, rounded to two decimal places; the quarterly contract will settle against the arithmetical average of the final settlement prices of the three corresponding monthly contracts in that contract quarter, rounded to two decimal places.