28 Apr 2020

What is the Dalian Commodities Exchange?

The Dalian Commodities Exchange is located in Dalian, China and trades futures contracts on a wide variety of commodities. The exchange the largest trader of agricultural futures in the world.

Understanding the Dalian Commodities Exchange

The Dalian Commodities Exchange has been a key factor in the revitalization of Northeast China’s expansion as an international agricultural hub, in part due to the area’s strategic location with access to railroads and highways. The exchange performs several major functions, including providing venues for futures and options trading, developing and listing contracts, organizing and supervising trading, clearing, and settlement. Additionally, the exchange handles market surveillance and rule enforcement, formulating and implementing risk management rules, organizing marketing and investor education events, market data and information services, and more.

History of the Dalian Exchange

The Dalian Exchange was established on February 28, 1993. China’s futures industry was revived in 1990 after 60 years, at which point the Dalian Exchange was created. It is a non-profit, self-regulating entity with about 200 members and over 160,000 investors. The exchange has the largest volume of any commodities exchange in China, in part due to the fact that the exchange is an important venue for the circulation of soybeans grown in mainland China. Through the nineties the exchange gained a reputation for financial integrity, risk management and functionality in the market, as well as for transparency and liquidity.

In 2013, the Dalian Commodities Exchange expanded from its role as an agricultural commodities exchange to include industrials, such as iron ore and coke coal. The exchange now has nearly 500,000 participants. In 2015, the DCE was ranked 8th out of the leading global derivatives exchanges by the Futures Industry Association, as well as the largest futures market for oils, plastics, coal, metallurgical coke, and iron ore.

Among its lesser-known traded commodities, the exchange trades: linear low-density polyethene, polypropylene, palm oil futures, eggs, fiberboard, soybeans, soybean meal, soybean oil, genetically modified soybeans, soybean meal options futures, rice, and corn. In 2016, the Futures Industry Association (FIA) reported that the Dalian Commodities Exchange was the 8th largest exchange in the world by trading volume. It boasted half the domestic market share in 2007, and captures roughly 2 percent of the global futures market share, including financial futures.

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