Shanghai Futures Exchange will open its nickel futures and options contracts to overseas traders and qualified foreign investors starting April 22, in a move aimed at establishing a "Shanghai price" for nickel in the global market.

The move, announced on March 20, allows three new types of entities to participate in nickel futures and options trading directly: overseas special participants, overseas intermediary institutions, and overseas clients.

To ease entry, the exchange will implement a mutual recognition policy, waiving knowledge tests, fund thresholds, and trading experience reviews for investors already authorized to trade other designated domestic varieties.

Nickel is a key material in stainless steel, electric vehicle batteries, and aerospace manufacturing. As the world's largest consumer and importer of nickel, China has a strong domestic demand for price risk management. Since its launch in 2015, Shanghai nickel futures have become a significant reference for domestic spot pricing.

However, overseas participants cannot directly engage in physical delivery because they are unable to issue or receive special VAT invoices. To address this, the exchange offers a channel for indirect participation, allowing overseas entities to transfer positions to a related domestic institution for delivery.

While nickel futures will continue to be priced and settled in renminbi, overseas traders and intermediaries can use US dollars as margin deposits, which will be converted into renminbi for settlement.

Nickel futures internationalization will enhance the resilience and stability of the global nickel industry chain, helping companies hedge against price fluctuations, stabilize production and operation, and achieve mutual benefit for both domestic and foreign market participants, said a representative from Zhejiang Huayou Cobalt Co Ltd.

Yang Yinghui, deputy general manager of COFCO Futures, noted that its Hong Kong subsidiary has already completed its registration as an overseas intermediary and is actively promoting nickel futures and options trading to overseas clients, ensuring the "Shanghai price" better serves the global nickel industry and empowers strategic emerging sectors such as new energy.

"Our overseas industrial clients have clearly expressed a strong interest in the internationalization of the Shanghai Futures Exchange nickel futures and plan to participate in trading as soon as possible," said Shi Chenghu, CEO of Bands Financial Limited.

Source: Shanghai Observer