The revised Risk Control Management Measures of the Shanghai Futures Exchange came into effect on May 28. The revisions were approved by the SFE Council on May 15. A key change is the removal of the fixed 20% limit on daily price fluctuation bands during extreme market conditions such as prolonged one-sided markets; instead, the exchange is now authorized to adjust these bands dynamically based on each contract’s characteristics and market volatility levels. Additionally, the implementation criteria for expanding price bands and raising margin requirements during reverse one-sided markets have been standardized, and the linkage between the declaration of abnormal market conditions and mandatory position reduction has also been adjusted. Meanwhile, the Shanghai International Energy Exchange—a subsidiary of the SFE—has simultaneously released and implemented its own revised rules. The rationale behind these changes is that a rigid 20% cap may hinder proper price discovery under extreme market scenarios, potentially leading to a ‘liquidity bottleneck’ where neither long nor short positions can be liquidated; a dynamic mechanism, however, helps prices reflect actual supply-demand dynamics more promptly, thereby accelerating rather than accumulating risks.
Tao Xinye, Chief Risk Officer at Xingzheng Futures, noted that geopolitical instability has been on the rise in recent years—container shipping rates doubled within a short period, while the conflict involving the U.S., Israel, and Iran drove oil prices to their steepest weekly increase in 40 years. Such extreme market movements are becoming increasingly common. Against this backdrop, these regulatory updates provide a clear institutional framework for the SFE to adopt more flexible and nuanced risk control measures, further refining market-oriented risk management mechanisms.