The Main Measures of China Futures Exchange to Resolve Market Risks
As the front-line management organization of the futures exchange, the futures exchange has a full understanding of market risks. In the development of futures trading in the past century, futures exchanges have formed an effective risk management system. These systems are mainly margin systems; Price limit system; Position limit system; Large household reporting system and compulsory liquidation system. I. Margin system Margin system refers to that in futures trading, each trader must pay a small amount of funds according to a certain proportion of the value of futures contracts (usually 5%- 10%) as the financial guarantee for the performance of futures contracts, and decide whether to add funds according to the changes of futures prices, so as to keep the margin level above the corresponding level. This ensures that every trader who participates in futures trading will perform the contract in good faith. Second, the price limit system The price limit system means that the trading price of a futures contract in a trading day shall not be higher than or lower than the prescribed price limit, and the quotation exceeding this limit will be regarded as invalid and cannot be traded. This is an important risk management system matching with the margin system, which at least ensures that each trader's margin can withstand the trading risk of one day. Theoretically, the trading risk of futures trading is controlled to a minimum through the daily debt-free settlement system (that is, the trader loses money in the day's trading and must make up the margin before the market opens the next day). Three. Position limit system Position limit system refers to the system in which futures exchanges restrict the positions of their members and customers in order to prevent the manipulation of market prices and the excessive concentration of futures market risks on a few investors. If the amount exceeds the limit, the exchange may, as necessary, forcibly close the position or increase the margin ratio. This is an important measure for the exchange to control the degree of market risk and prevent the risk from expanding. Four. Bulk declaration system Bulk declaration system means that when the speculative position of a member or customer on a certain variety of position contracts reaches more than 80% (inclusive) of the speculative position limit stipulated by the exchange, the member or customer (through a brokerage member) should declare its funds and positions to the exchange. This is an important system closely related to the position limit system to prevent large households from manipulating market prices and control market risks. V. Forced liquidation system The forced liquidation system refers to the system that the exchange or futures brokerage company implements forced liquidation in order to prevent the risk from further expanding when the trading margin of members or customers is insufficient and not replenished within the specified time, or when the number of positions held by members or customers exceeds the specified limit. This is an important system for exchanges or futures brokerage companies to control and resolve market risks. In addition, the systems related to risk control include daily debt-free settlement system and risk reserve system. You can continue to ask questions if you have any questions. I hope it helps you. Remember to adopt if you feel good.