(BEIJING, China) The launch of China’s yuan-denominated oil futures will mark the culmination of a d ecade-long push by the Shanghai Futures Exchange (ShFE) aimed at giving the world’s largest energy c onsumer more power in pricing crude sold to Asia #AceFinanceDesk reports

#AceFinanceReport – Mar.22: #BRICS firmly in place and ‘ China Development Bank ‘ as HQ in Beijing its time to take down the once mighty ‘ Petro-Dollar ‘ by replacing it with the Yuan and this is just the beginning #AceFinanceDesk reports

WHAT ARE THE CONCERNS AMONG FOREIGN INVESTORS?

* Worries include how to freely exchange the yuan because of a Chinese clampdown on capital outflows, while some concerns remain about Beijing’s heavy handed intervention in its commodity markets in recent years, traders and analysts said.

The obligation to trade Shanghai crudes in yuan will also add a currency risk to the market, which some traders are reluctant to take.

  • The Shanghai International Energy Exchange (INE), the unit of ShFE running the contract, has strict daily limits on the number of canceled orders allowed per account, aimed at curbing spoofing. This involves placing bids to buy or offers to sell futures contracts with the intent to cancel them before execution. By creating an illusion of demand, spoofers can influence prices to benefit their market positions.

For a larger client placing orders of more than 300 lots, equivalent to 30,000 barrels of oil, the limit is 50 a day. Users with smaller orders are allowed 500 cancellations.

That’s different to international exchanges, like the CME (CME.O), which uses a ratio based on an investor’s traded volume.

On days when price volatility and volumes are high, overseas investors new to Chinese markets could get penalized if they exceed those restrictions as they try to adjust their positions, traders say.

  • Chinese commodity futures investors do not typically trade steadily over the months, but instead pick specific months in which they deal. That could complicate efforts to trade spreads between Brent, WTI and Shanghai.

Take iron ore <0#DCIO:>, one of China’s most-active futures markets: most of the more than 2.3 million lots of open interest are in May and September contracts, with delivery months in between ranging from tens of thousands of lots to in some cases less than 10.

In contrast, liquidity across the first five months of the Brent and WTI contracts <0#LCO:> <0#CL:> are relatively evenly spread out, reflecting their popularity among hedge funds and other financial players, who like to trade month by month.

  • There will be a 1.5-hour gap between the settlement and the price settlement by S&P Global Platts (SPGI.N), which sets physical prices for the region between 4:00-4:30 p.m.

WHAT WILL HAPPEN DURING CHINA’S NATIONAL HOLIDAYS?

Trading will stop for China’s week-long national holidays – Spring Festival and Golden Week – leaving the Shanghai market out of synch with the western exchanges.

Shorter trading hours – with three slots each day – compared with almost 24 hours on western exchanges means the market may sometimes play catch-up with the rest of the world.

WHO WILL USE IT IN THE DOMESTIC INDUSTRY?

China has opened more than 6,000 trading accounts, including the country’s oil majors and about 150 brokerages. Ten foreign intermediaries have registered, including JPMorgan, Bands Financial, Straits Financial Services and other Hong Kong based affiliates of domestic brokerages.

It will likely attract mainly ‘mon-and-pop’ speculative investors, who dominate the country’s other often volatile commodity futures markets from dates to iron ore, although transaction fees for crude are relatively high.

China’s independent refineries are more likely to process heavy crude instead of the medium-sour crude traded in futures, a Shandong-based crude trader said.

At least three independent refineries who are looking to use the contract for hedging also said they are unsure about delivery. Under the rules, buyers cannot choose a specific grade that will be delivered or the location of the warehouse for delivery.

HOW DO FOREIGN USERS OPEN A TRADING ACCOUNT?

Foreign investors will need to open a non-residential bank account with one of the eight banks that handles margin deposit for yuan crude futures, according to INE.

The banks are Agricultural Bank of China, CITIC Bank, China Construction Bank and Industrial and Commerical Bank of China, Bank of China, Bank of Communications, China Merchant Bank and the Development Bank of Singapore.

Investors will need to transfer money from that bank account to an account opened with either a domestic broker or foreign broker or agencies registered with the INE. The broker will open two accounts with INE: one for margin deposit and one for settlement for foreign currencies.

China aims to challenge Brent, WTI oil with crude futures launch https://t.co/xvNWQKMbFC pic.twitter.com/PSxyNLes05— Reuters Business March 22, 2018: Reporting by Meng Meng, Josephine Mason and Tom Daly; editing by Richard Pullin

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(AFRICA) African leaders signed accords AfCFTA that’s expected to boost commerce within the 55-me mber African Union and eventually supplant a patchwork of existing agreements: Nigeria, which together with South Africa makes up half of the continent’s GDP canceled his trip to Kigali, saying his government needs more time for input from local businesses before he can sign the pact: Ugandan President Yoweri Musev eni and his Burundi counterpart, Pierre Nkurunziza, also skipped the gathering #AceFinanceDesk reports

#AceFinanceReport – Mar.22: More than 40 nations signed the African Continental Free Trade Area agreement, or AfCFTA, which commits governments to removing tariffs on 90 percent of goods and phasing in the rest in future: The agreements will still require ratification by the individual governments and will only come into force when ratified by at least 22 countries: “The promise of free trade and free movement is prosperity for all Africans, because we are prioritizing the production of value-added goods and services that are Made in Africa,” Rwandan President Paul Kagame said before the leaders began signing the agreements. “The advantages we gain by creating one African market will also benefit our trading partners around the world.”#AceFinanceDesk reports

Intra-Africa trade stands at about 16 percent of the continent’s total, compared with 19 percent in Latin America and 51 percent in Asia, according to the AU. The agreement could increase this by half for Africa, the United Nations Economic Commission for Africa estimates: Three regional groups on the continent — the Common Market for East and Southern Africa, the Eastern African Community and the Southern African Development Community — signed an agreement in June 2015 to create a trade bloc covering 26 countries as a precursor to the continental grouping. A week later, members of the AU started talks for the establishment of the continent-wide free trade area.

President Muhammadu Buhari of Nigeria, which together with South Africa makes up half of the continent’s gross domestic product, canceled his trip to Kigali, saying his government needs more time for input from local businesses before he can sign the pact. Ugandan President Yoweri Museveni and his Burundi counterpart, Pierre Nkurunziza, also skipped the gathering.

Buhari, concerned the deal could lead to the dumping of finished goods in Nigeria, appointed a committee Wednesday to review the agreement and report within two weeks, presidential spokesman Femi Adesina told reporters in Abuja, the capital. “The way forward will then be unfolded,” he said.More than 40 African leaders sign a free-trade agreement for the region https://t.co/aFgziUGMwp via @tictoc https://t.co/VFomXQ9Gnv

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(WASHINGTON) — Farmers, electronics retailers and other U.S. businesses are bracing for a backlash a s Donald Trump targets China for stealing American technology or pressuring U.S. companies to hand it over w ith tariffs of as much as $60-billion: As China promises a tit for tat #AceFinanceDesk reports

#AceFinanceReport – Mar.22: The administration is expected Thursday to slap trade sanctions on China, perhaps including restrictions on Chinese investment and tariffs on as much as $60 billion worth of Chinese products: Dozens of industry groups sent a letter last weekend to Trump warning that “the imposition of sweeping tariffs would trigger a chain reaction of negative consequences for the U.S. economy, provoking retaliation; stifling U.S. agriculture, goods, and services exports; and raising costs for businesses and consumers.” #AceFinanceDesk reports


The announcement will mark the end of a seven-month U.S. investigation into the hardball tactics China has used to challenge U.S. supremacy in technology, including dispatching hackers to steal commercial secrets and demanding that U.S. companies hand over trade secrets in exchange for access to the Chinese market:
The administration argues that years of negotiations with China have failed to produce results.“It could be a watershed moment,” said Stephen Ezell, vice president of global innovation policy at the Information Technology & Innovation Foundation, a think tank. “The Trump administration’s decision to go down this path is illustrative that previous strategies have not borne the hoped-for fruit.”Business groups mostly agree that something needs to be done about China’s aggressive push in technology — but they worry that China will retaliate by targeting U.S. exports of aircraft, soybeans and other products and start a tit-for-tat trade war of escalating sanctions between the world’s two biggest economies.“The sanctions are a very big deal,” says Mary Lovely, a Syracuse University economist and senior fellow at the Peterson Institute for International Economics. “The Chinese see them as a major threat and do not want a costly trade war.”The move against China comes just as the United States prepares to impose tariffs of 25 percent on imported steel and 10 percent on aluminum — sanctions that are meant to hit China for flooding the world with cheap steel and aluminum but will likely fall hardest on U.S. allies like South Korea and Brazil because they ship more of the metals to the United States.

Trump campaigned on promises to bring down America’s massive trade deficit — $566 billion last year — by rewriting trade agreements and cracking down on what he called abusive commercial practices by U.S. trading partners. But he was slow to turn rhetoric to action. In January, he imposed tariffs on imported solar panels and washing machines. Then he unveiled the steel and aluminum tariffs, saying reliance on imported metals jeopardizes U.S. national security.To target China, Trump has dusted off a Cold War weapon for trade disputes: Section 301 of the U.S. Trade Act of 1974, which lets the president unilaterally impose tariffs. It was meant for a world in which large swaths of global commerce were not covered by trade agreements. With the arrival in 1995 of the World Trade Organization, which polices global trade, Section 301 fell largely into disuse.At first it looked like Trump and Chinese President Xi Jinping were going to get along fine. They enjoyed an amiable summit nearly a year ago at Trump’s Mar-a-Lago resort in Florida. But America’s longstanding complaints about Chinese economic practices continued to simmer, and it became more and more apparent that the U.S. investigation into China technology policies was going to end in trade sanctions.

Chinese Premier Li Keqiang this week urged Washington to act “rationally” and promised to open China up to more foreign products and investment. “China has been trying to cool things down for weeks. They have offered concessions,” Lovely says. “Nothing seems to cool the fire. I fear they will take a hard line now that their efforts have been rebuffed. … China cannot appear subservient to the U.S. China: We will hit back if US announces new tariffshttps://t.co/07zzflC8j0 pic.twitter.com/1VRsSMY2TI— CNNMoney (@CNNMoney) March 22, 2018

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(BOSTON, Mass.) JUST IN: The top agricultural food export crop in Bay State could face a new business hurdle for international customers as Trumps administration looks to apply tariffs to EU exports as EU assess its taxes on incoming US goods #AceFinanceDesk reports

#AceFinanceNews – Mar.22: The Boston Globe reports Massachusetts cranberries could face a 25 percent tariff on exports to Europe: The continent is the top consumer of cranberry exports from the Bay State, which produces 15 percent of the world’s cranberries #AceFinanceDesk reports

The Trump administration’s move to impose tariffs on steel and aluminum imports could cause the EU to assess its taxes on incoming U.S. goods.

Editor says #AceNewsDesk reports & #Brittius says are provided by Sterling Publishing & Media News and all our posts, links can be found at here https://t.me/acenewsdaily and thanks for following as always appreciate every like, reblog or retweet and free help and guidance tips on your PC software or need help & guidance from our experts AcePCHelp.WordPress.Com or you can follow our breaking news posts on AceBreakingNews.WordPress.Com or become a member on Telegram https://t.me/acebreakingnews