What is 'Dalian Commodities Exchange'

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

BREAKING DOWN 'Dalian Commodities Exchange'

The Dalian Commodities Exchange has been a key component in the revitalization of Northeast China and its 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; 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 and has the deepest pool of liquidity of any commodities exchange in China. The exchange emerged from the restructuring of China’s futures industry, which was revived in 1990 after a 60-year hiatus, but saw the government close many of the 40-plus exchanges which emerged because of widespread price manipulation. It is a non-profit, self-regulating entity with about 200 members and over 160,000 investors. It also has the largest volume of any commodities exchange in China. Since the exchange was established, it been an important player in the production and circulation of mainland soybeans. Over the next decade of market ratification, the exchange earned a reputation among investors for its financial integrity with prudent risk management and great market functionality in international price correlation, transparency and liquidity.

The Dalian Commodities Exchange started off as an agricultural commodities exchange before expanding into industrials (coking coal and iron ore) in 2013. It now has almost half a million market participants. Only around 2 percent of those are corporate accounts. 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. According to Futures Industry Association (FIA), the Dalian Commodities Exchange was the 8th largest exchange in the world by trading volume in 2016. It boasted half the domestic market share in 2007, and captures roughly 2 percent of global futures market share, including financial futures.

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