China’s Shanghai Futures Exchange issued rules today to prevent “abnormal” trading following a similar move by the Zhengzhou bourse to curb speculation as commodity prices trade at record levels.
The exchange will alert the securities regulator if investors are found trading between their own accounts or frequently placing and canceling orders, which can mislead the market, it said in a statement on its website today. Investors should also not use related accounts to hold positions that exceed limits for individual investors, the bourse said.
Domestic prices of rubber, cotton and sugar climbed to records today on speculative buying and supply shortages. China’s consumer price index rose to a 23-month high in October, spurring the state reserves regulator to sell sugar, cotton, corn, aluminum, and zinc to cool prices.
“This is clearly aimed at curbing excessive speculation,” Lin Hui, deputy director of the research department at the Orient Securities Futures Co.
The Shanghai Futures Exchange, where copper, aluminum, zinc, natural rubber, steel, and fuel oil futures are traded, said it will take measures ranging from verbal warnings to submitting cases to the China Securities Regulatory Commission to probe any “abnormal trading”.
“Speculative money has been flowing into commodities, partly because of strong inflation expectations,” said Axl Wang, an analyst at Wanda Futures on Oct. 29.
Copper for February delivery on the Shanghai Futures Exchange gained 4.2 percent to close at 67,390 yuan ($10,120).
(bloomberg.com)
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