China commodity bourses to stop 'double-counting' from 2020

BEIJING (Reuters) - China’s three biggest commodities exchanges said on Tuesday they would end their practice of double-counting trades from Jan. 1, 2020 and report on a single-count basis instead to help them converge with international standards.

The Shanghai Futures Exchange (ShFE), known for its base metal contracts, the Dalian Commodity Exchange (DCE), home to China’s iron ore futures, and the Zhengzhou Commodity Exchange, which trades sugar and cotton, announced the switch in separate statements.

Unlike major commodity exchanges overseas, the Chinese bourses currently count both buy and sell as separate contributors to trade volumes.

Double-counting has prevailed in Chinese commodity futures, whereas single-counting has been used for China’s equity index futures, a ShFE official said in a Q&A circulated by the exchange, noting that this “mixed usage has made it unnecessarily inconvenient for statistics and analysis”.

The switch, which will also apply to ShFE subsidiary bourse the Shanghai International Energy Exchange (INE), where China’s crude oil futures contract is traded, is being made at the request of the China Securities Regulatory Commission.

“This change will help China’s futures market to converge with the international statistical standard and to be more international and professional,” a ShFE statement said.

China has made four commodities futures contracts open to foreign investors since March 2018, including crude oil and iron ore.

The switch will require some adjustment to trading rules, with the SHFE official saying the definition of the trading volume, open interest and turnover would be revised.

The INE has already amended its rules along these lines, the ShFE official said, adding that the ShFE and INE would organize drills and tests for members and data vendors to help them adapt to the adjustment.

The DCE said the change would only affect statistics and not futures prices or its current business, while a brief Zhengzhou statement only said it would make the switch on Jan. 1.

Reporting by Tom Daly and Min Zhang; Editing by Alison Williams