Shanghai Futures Exchange received regulatory approval on Wednesday to start
trading in silver contracts, giving Chinese investors a new way to bet on the
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).
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.
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."
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.
introduction of silver futures comes after Chinese investors have shown
increasing interest in the metal amid surging inflation and the sluggish
performance of the stock and property markets - the darlings of Chinese
investors. In March, about 134 billion yuan in Ag
(T+D) contracts were traded, more than 15 times the amount traded two years
than gold, most retail investors prefer silver because the minimum
requirement for investing in it is much lower in China.
analysts say silver futures contracts will be more volatile and thus less
attractive to individual investors.
(T+D) contracts, the futures contracts won't be traded in night
sessions that are synchronized with global markets. Shorter trading
times will exacerbate price fluctuations, which can be dangerous to
relatively uninformed individual investors, said Yang Yijun,
chief analyst with Wellxin.com, a precious metal consultancy.
the price of silver has long been volatile. The global price of silver has
more than doubled since 2009. On
one day last year, it plummeted by 13 percent.
introduction of the silver futures contracts comes as good news for silver
producers, which will now be better positioned to hedge their risks, analysts