The most direct difference between steel futures and electronic trading is reflected in the design of the contract. The two are the same in terms of minimum price change, delivery month and delivery method, but the trading unit, margin, delivery There are big differences in terms of grade and so on. As for which one to do, I think it depends on the situation. After all, the two are suitable for different objects. It seems that judging from the trading rules of the futures market and the trading rules of electronic trading, to give an example, such as the electronic trading of the standard steel market. It is stipulated that only enterprises are allowed to do so, while the futures market does not distinguish between companies and individuals, so this also leads to some differences between electronic trading and futures. The following are some differences between the two, you can study them carefully

Trading Unit

The size of the trading unit is mainly determined by considering the market size of the contract subject matter and the trader's funds. Factors such as scale, spot trading habits of the commodity, etc. In view of the huge spot market of my country's steel products and active trading, the choice of 10 tons/lot in the futures market is in line with the characteristics of the steel products.

Daily price maximum fluctuation limit

The purpose of setting price limits is to prevent risks to investors caused by excessive price fluctuations. Generally speaking, the more frequent and violent the price fluctuations of the underlying asset, the larger the price limit should be set. Judging from the comparison between the two, the price selected in the last period was not more than the settlement price of the previous trading day ±5, while the bulk steel transaction was not more than the average price of the previous trading day ±200 yuan/ton. Judging from the trend of rebar prices in my country in recent years, the fluctuations are relatively violent. Therefore, the percentage system is more flexible. The daily increase or decrease changes with the change of the settlement price of the previous day. When the price is at a relatively high level, the room for rise and fall is expanded accordingly, and when the price is at a low level, the room for rise and fall is also reduced accordingly. At the same time, the percentage system enables the trading order to respond more promptly and effectively to changes in spot prices. Electronic trading chooses absolute price changes. When the price is at a high level, it is beneficial to investors' risk control, but when the price is at a low level, it is not conducive to investors' risk management.

Transaction fee

The futures contract is no more than 20,000% of the transaction amount (including risk reserve), while the bulk steel transaction fee is 1 yuan/ton. If Based on the current prices of rebar and wire rods, the bulk handling fee is relatively cheap.

The difference between steel futures and electronic trading is not only reflected in the design of the contract, but also in aspects such as investor structure, market liquidity, legal supervision, and transaction delivery.

First of all, from the perspective of investor structure. Participants in electronic trading are mainly steel-related enterprises, including manufacturers, consumers, traders, etc. They must be corporate legal persons registered with the industrial and commercial administration department, and must pay seat rent before they can obtain the qualification of electronic trading traders. Participants in the futures market do not have many limitations. Not only steel-related companies can participate, but other companies including private equity institutions can also participate, and natural persons can also become traders in steel futures. Any person or enterprise can participate in steel futures trading as long as they meet the relevant national futures trading subject qualification regulations, and do not need to pay seat rent. They only need to open a futures trading account with a legal futures company.

Secondly, due to different investor structures, there are also big differences in liquidity between electronic trading and futures markets. Because only spot companies participate in electronic trading, and they are all regional, the liquidity is poor and the trading volume is generally low. The futures market is a national market with a large number of speculators, which not only provides the market with sufficient liquidity, but also makes it easier for companies to transfer risks.

Thirdly, in terms of legal supervision, electronic trading mainly relies on some self-made regulations. Therefore, it is inevitable that there will be loopholes in supervision or poor implementation of the system that will cause losses to enterprises. The futures market is regulated by the State Council. , China Securities Regulatory Commission, exchanges and other levels of supervision, the system construction is relatively complete, companies do not have to worry about breach of contract and other issues.

Finally, the more important difference between the electronic market and the steel futures market is also reflected in the institutional aspect.

The futures trading system mainly includes the transaction settlement system, risk control system and delivery system, etc. The risk control system specifically includes the margin system, price limit system and position limit system, etc. The settlement systems of steel futures and electronic trading are relatively similar. They both adopt a daily settlement system. The profit and loss status of the customer's account is settled after the end of each day's trading. However, the two are quite different in terms of risk control and delivery.

Risk control system

Margin system: According to the regulations of the Shanghai Futures Exchange, the minimum trading margin for rebar and wire rod futures is 7% of the futures contract value, but when the contract is listed and operated There will be margin adjustments in different periods and when the contract position reaches different levels.

Judging from the margin levels of futures trading and electronic trading, it is obvious that futures trading is much lower than electronic trading, which highlights the leverage effect of the futures market of "using small to gain big", which makes investors' funds occupied Smaller, thereby improving the efficiency of use of funds. Moreover, adjusting the margin ratio as the trading date and position volume changes is more conducive to risk control and guaranteed performance. Electronic trading is relatively simple in terms of margin adjustment. The margin ratio will only be adjusted to 40 when entering the agreed delivery month, and the margin will not be adjusted at other times. Of course, this will be simpler for investors, but it ignores changes in market conditions and is not conducive to risk control.

Price limit system: In addition to the ±5 stipulated in the above-mentioned contracts, rebar and wire rod futures will experience huge fluctuations in market prices (such as the cumulative one-way movement for 3 consecutive days, 4 days, and 5 days exceeding 7.5, 9, 10.5 a.m.) or when a continuous extreme situation occurs (such as a unidirectional limit or limit for several consecutive trading days), the exchange will adjust the limit range to adapt to market conditions and promote contract liquidity. The price limit regulations for electronic trading are relatively simple and single, lacking adjustments. Although relatively simple, they also ignore market conditions and are not conducive to risk control and market liquidity.

Position limit system: There is no specific position limit system in the electronic trading market, so it is easy to manipulate the market, and it is also easy to cause defaults due to positions that are too large to be delivered. However, there is a detailed position limit system in the futures market, which clearly stipulates the number of positions held by non-trading members, trading members, and ordinary investors. This avoids the possibility of market manipulation and the occurrence of defaults, and ensures that transactions and Security of delivery.

Delivery system

There are very big differences in the delivery between electronic trading and futures:

First of all, in terms of the grade of the delivered commodity, the rebar futures The delivery standard products are of high grade and have various specifications, which are in line with my country's industrial development trend and can meet the needs of different enterprises. However, the delivery grade of rebar in bulk electronic trading is low and the specifications are single. The standard product for wire rod futures delivery is a product with a nominal diameter of 8mm, which is also in line with the national industry development trend, because the country introduced a new standard on September 1, 2008. 8mm is the recommended nominal diameter, and 6.5mm is only a transitional product. Therefore, The exchange uses 6.5mm wire as a delivery substitute. In bulk electronic trading, it is just the opposite. 6.5mm is the delivery standard and 8mm is the delivery substitute, which is not conducive to the country's industrial adjustment.

Secondly, the delivery unit in the futures market is 300 tons and its integral multiple. This delivery unit is considered from the aspects of rational use of storage space, convenience of railway transportation, and play of the functions of the futures market. Therefore, the delivery unit is set It is large and not suitable for small traders to carry out delivery operations. The delivery unit in the electronic trading market is only 10 tons, and the quantity is very low, which is suitable for small traders.

Thirdly, due to imperfect system supervision in the delivery of electronic trading, problems such as delivery product quality cannot be guaranteed, specifications are difficult to unify, and due to the use of weighted delivery, there are often serious overflows and shortfalls. , causing great losses to relevant enterprises. In order to avoid problems such as quality, overflow and shortage of delivered commodities, the Shanghai Futures Exchange has strict regulations on the delivery commodities of rebar and wire rod futures.

For each delivery warehouse receipt, the rebar and wire rod must be produced by the same manufacturer, the same brand, the same registered trademark, and the same nominal diameter. The rebar is also required to be a commodity of the same length (for physical delivery) The length of the rebar is 9 meters or 12 meters (fixed length), and the production date does not exceed two consecutive days, and the earliest date is used as the production date of the warehouse receipt. Moreover, the delivery of rebar and wire rods in the futures market are all delivered by actual weight. The physical overweight and underweight of each warehouse receipt shall not exceed 3, and the pound difference shall not exceed 0.3. This avoids excessive overweight and underweight during the delivery process. Problems that cause serious losses to the delivery party. The exchange also has strict regulations on the validity period of delivered commodities, that is, the validity period of delivery in the warehouse is within 90 days from the production date, and the warehouse receipt can only be made within 30 days from the production date after entering the delivery warehouse, which avoids delivery The party uses goods that are about to expire for delivery, causing losses to the consignee.

Moreover, there are also differences between the two in the settings of the delivery warehouse. The delivery of electronic trading is carried out in the delivery warehouse designated by electronic trading. Generally, because electronic trading is highly regional, its designated delivery warehouse also has obvious regional characteristics. The delivery warehouse of the futures market is determined by the exchange. Currently, for the delivery of rebar and wire rods, the exchange has designated delivery warehouses in North China and East China, and has introduced a special factory warehouse delivery system as a supplement to the exchange's delivery warehouse, that is, qualified companies can apply for their own warehouses Becoming a delivery warehouse will not only effectively solve the shelf life and transportation problems of products, but also help promote corporate brands.

In addition, there are also differences in delivery prices between the two markets. Electronic trading generally uses the average price of the five days before delivery as the delivery price, while the futures market uses the settlement price on the last trading day as the delivery price. The two are also different in terms of delivery fees, delivery procedures and other details. We will not go into details here.

To sum up, we can clearly see the differences between steel futures and electronic trading in terms of contracts, transactions, and delivery. The launch of steel futures has a certain positive impact on the development of the electronic market. It also helps to form a market system that organically combines steel spot and futures, standardizes and improves the steel circulation market, and thus makes my country's steel market more standardized, healthy and orderly development.