Management of hedging line is related to position limit system. To better satisfy investors’ need for hedging while preventing market risks, the CFFEX adopts the hedging line approval system whereby a broader position limit will be granted upon examination to approved hedgers who have great demand for hedging and are exempted from the original position limit.
It is stipulated in the “Measures of the China Financial Futures Exchange (CFFEX) on Administration of Hedging Business” that clients who need hedging lines should apply to members where their accounts are opened. Members then handle the application procedures at the CFFEX after examining the application materials. The CFFEX will issue the hedging line according to the hedging applicant’s trading condition on spot market, credit status and market condition, and the approved hedging line will not exceed that applied for in the hedging proving materials provided.
