Shanghai Futures exchange to offer contracts for silverSubmitted by Charleston Voice on Fri, 04/27/2012 - 23:58
April 28, 2012 / D.Collins /
The China Money Report
The Shanghai Futures Exchange received regulatory approval on Wednesday to start trading in silver contracts, giving Chinese investors a new way to bet on the precious metal. The lot size of the contracts was set at 15 kilograms and the lot prices will be allowed to fluctuate by 5 percent a day. The margin requirement was set at 7 percent and prices will be quoted in yuan. The minimum amount the prices will be allowed to fluctuate was set at 1 yuan (16 US cents).
Trade dollars were larger for a reason – they were designed to be exported to help expand trade with China, whose merchants wanted silver coins, not gold. The merchants in China might have accepted Trade dollars, but back in the United States a couple of years after they were first issued, no merchant wanted to accept them, at least as a dollar. That’s because they had their legal tender status revoked, making them the only coin in U.S. history that was circulating in significant numbers at less than face value.
The silver contracts are the first of their type to be offered in China.
Before, investors had to use Shanghai Gold Exchange Ag (T+D) contracts to conduct certain transactions of the metal. They could also go to commercial banks to buy paper silver, which don’t have to be delivered physically.
“There has been an absence of a means of trading in silver in China,” said Wang Ruilei, an analyst with CGS Co Ltd, a precious metal trader. “The market will be bigger and more liquid with the advent of these future contracts.”
The silver contracts will be only one in a series of futures contracts that are to be introduced in what analysts described as a year of innovation for the country’s futures market. Futures contracts for government bonds are being tested and are expected to be formally introduced soon. New contracts for crude oil, charcoal and glass are also being developed...Read more>> Shanghai Futures exchange to offer contracts for silver