Official Interpretation! Cotton Futures Exchange'S Amendment To The Rules Of The Actual Cotton Futures Exchange

On July 28, the Zhengshang Exchange issued an announcement to revise and improve the business rules of cotton futures. This revision mainly includes: Adjust the validity period of cotton futures warehouse receipts, add the upper limit of cotton impurity rate index, update the cotton warehousing packaging requirements, delete the relevant provisions of the transit delivery system, and adjust the names of cotton futures and option contracts. The revised contract rules will come into effect on January 2021.

The relevant person in charge of the Zheng Shang exchange said that in the development process of cotton futures market, some new situations and new changes appeared, which put forward new requirements for continuously consolidating the foundation of cotton futures system. In order to better close to the actual situation of the spot and further enhance the ability of cotton futures to serve the real economy, the Zhengzhou Mercantile Exchange revised the cotton futures contract rules.

It is understood that This rule adjustment shortens the validity period of cotton futures warehouse receipt, and adjusts the mandatory cancellation time of cotton warehouse receipt to the 15th trading day in November of N + 1 year. The delivery contract in January can be used to solve the problem of cotton delivery in January. At the same time, shortening the validity period of warehouse receipts is conducive to reducing the storage time of warehouse receipt goods, reducing the backlog of aged cotton, and improving the safety of delivery and storage.

In terms of futures delivery products, the amendment of the contract added the stipulation that the impurity rate should not be higher than 3.5% in the process of registration and warehousing of cotton futures warehouse receipts, so as to avoid high impurity cotton entering the futures market.

In terms of warehousing packaging, on December 31, 2013, the national standard cotton packaging of the people's Republic of China (gb6975-2013) was issued to replace the 2007 version of the national standard. The latest national standard cotton storage requirements for the same.

In terms of transfer delivery system, in 2015, in order to comply with the transfer trend of cotton industry, Zheng Shang set up a transfer delivery warehouse in Xinjiang to test the feasibility of carrying out cotton futures delivery in Xinjiang. In September 2017, the transfer and cutting warehouse in Xinjiang cotton futures was officially transformed into a delivery warehouse. The institutional arrangement of transfer delivery, which is targeted, temporary and exploratory, has completed its mission. Therefore, in the new rule system, the provisions on the transit delivery system are deleted.

In addition, the contract name will be revised from "cotton futures contract No. 1" to "cotton futures". With the modification of the cotton futures contract name, the name of the subject matter of the option contract also changes.

Li Youyin, chairman of Weishi Textile Co., Ltd He said that the revision of cotton futures contract rules increased the upper limit of cotton impurity rate index, which can guide the upstream cotton production enterprises to improve the quality awareness of delivery products, ensure the delivery quality, and promote the transformation and upgrading of the cotton industry.

The relevant person in charge of China textile cotton International Trade Co., Ltd. believes that since the cotton futures listing for 16 years, it has achieved remarkable effects in helping enterprises in the cotton industry chain to avoid price risks and lock in operating profits. The revision of cotton contract rules conforms to the development needs of the spot market and is closer to the actual situation of the spot market, which is helpful for industrial enterprises to make better use of futures instruments.

-  Answers to questions about Revision of Cotton Futures Rules -

Recently, the relevant person in charge of the Zhengshang Institute accepted an interview with a reporter to explain in detail the background and main contents of the revision.

1、 What is the background of the amendment?

This year is the 16th year of cotton futures listing. In the past 16 years, cotton futures have adhered to the road of high-quality development, steadily expanded the market scale, effectively played the function of price discovery and hedging, and continuously deepened the integration with the spot market, which has become the stabilizer and booster for the development of cotton industry. At the same time, in the development process of cotton futures market, some new situations and new changes appear, which puts forward new requirements for continuously consolidating the foundation of cotton futures system. In order to better close to the actual situation of the spot and further enhance the ability of cotton futures to serve the real economy, the Zhengzhou Mercantile Exchange revised the cotton futures contract rules.

2、 What are the main contents of the revision of cotton futures contract rules?

The revision of cotton futures rules mainly involves the following aspects: first, adjusting the validity period of cotton futures warehouse receipts; second, adding the upper limit of cotton impurity rate index; third, updating the requirements of cotton warehousing packaging; fourth, deleting the relevant provisions of transit delivery system; fifth, adjusting the names of cotton futures and term right contracts.

3、 How is the validity period of cotton futures warehouse receipt adjusted?

The contract amendment shortened the validity period of cotton futures warehouse receipts, and the mandatory cancellation time of cotton warehouse receipts was adjusted to the 15th trading day in November of N + 1 year. After the adjustment, it can ensure that all cotton used for contract delivery in January is new year's cotton, effectively solve the problem of miscellaneous delivery of new and old cotton in January contract delivery, and highlight the representativeness of contract price in January. At the same time, shortening the validity period of warehouse receipts is conducive to reducing the storage time of warehouse receipt goods, reducing the backlog of aged cotton, and improving the safety of delivery and storage.

4、 Why increase the upper limit of cotton impurity rate index?

The amendment of the contract adds the stipulation that the impurity rate shall not be higher than 3.5% during the registration and warehousing of cotton futures warehouse receipts, mainly considering that some high impurity cotton flows into the downstream and affects the spinning quality. Setting the upper limit of cotton impurity rate index can avoid high impurity cotton flowing into futures market and create better basic conditions for high-quality development of cotton futures market.

5、 What are the changes in warehousing packaging requirements?

On December 31, 2013, the national standard cotton packaging of the people's Republic of China (gb6975-2013) was issued to replace the 2007 national standard. For example, the "steel wire and steel belt" of "steel wire and steel belt" are changed to "steel wire and steel belt" in the national standard, such as "steel wire and steel belt" are added to the "steel wire and steel belt" in the national standard In addition, the overlap length and surface marking content of polyester strapping belt for cotton packaging were increased. In order to keep consistent with the national standard, cotton futures on the storage of cotton packaging related requirements using the latest national standards.

6、 Why delete the relevant provisions of transit delivery warehouse?

In 2015, in order to comply with the trend of cotton industry transfer, Zheng Shang set up a transfer delivery warehouse in Xinjiang to test the feasibility of carrying out cotton futures delivery in Xinjiang. In September 2017, the transfer and cutting warehouse in Xinjiang cotton futures was officially transformed into a delivery warehouse. The institutional arrangement of transfer delivery, which is targeted, temporary and exploratory, has completed its mission. Therefore, in the new rule system, the provisions on the transit delivery system are deleted.

7、 What are the changes in the names of cotton futures and options contracts?

The contract name will be revised from "No. 1 cotton futures contract" to "cotton futures". Cotton option contract was named for futures contract. With the name of cotton futures contract changed, the name of the subject matter of option contract also changed.

8、 When will the revision of cotton futures contract rules come into effect?

The revision of cotton futures contract rules will come into effect on September 1, 2021, that is, the newly registered cotton warehouse receipts in 2021 / 2022 will be implemented, and the cotton warehouse receipts generated before will not be affected by this amendment.