SMX Metal Bulletin Iron Ore (MBIO) Index Futures.
Contract Details
Symbol SMMBIO
Trading Unit 100 times MBIO Index price
Price Quotation Basis US dollars to two decimal places (e.g. US$ 145.60)
Tick Size US$ 0.10 (US$ 10 per contract)
Trading Hours 1000 to 2000 SGT (1900 SGT during British Summer Time)
Contract Months Current month and 5 consecutive months
Last Trading Day Last Business Day of the maturing contract month
Settlement Cash
Final Settlement Price The Final Settlement Price will be the MBIO Index as published by Metal Bulletin Limited on the Last Trading Day
Grade/Quality Index data normalised to 62% Fe Iron Ore, CFR Qingdao
Commodity Group Index
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Scope

The provisions herein shall apply to all SMX MBIO Index Futures Contracts transacted on the Exchange. Procedures for trading, clearing, settlement and any other matters not specifically covered herein shall be governed by SMX and SMXCC Rules.

Contract Symbol

SMMBIO

Contract Designation
SMMBIODDMMMYYYY where SMMBIO is the contract symbol and DDMMMYYYY refers to the Contract Month (e.g. March 2011 Contract = SMMBIO31 MAR2011).
Index
The SMX MBIO Index Futures Contract prices the MBIO Index (Metal Bulletin Iron Ore Index). MBIO Index is a daily index of iron ore prices from producers, buyers and brokers. The MBIO Index is expressed in US$ per dry metric ton of 62% average iron ore content, CFR Qingdao, China and is compiled and published by Metal Bulletin Limited
Contract Size
The traded quantity for the Contract shall be 100 times the MBIO Index Futures price.
Quotation Basis
All bids and offers to buy or sell SMX MBIO Index Futures Contracts shall be quoted in US dollars to two decimal places (e.g. $145.60).
Minimum Tick Size
The minimum tick size for all bids and offers to buy or sell SMX MBIO Futures Contracts shall be one tenth US dollar (.10) (equivalent to US$10 per Contract).
Contract Months
Trading shall be conducted in each calendar month of the year. Six consecutive contracts shall be listed for trading at any time. A new Contract Month shall be listed on the first Business Day following the Last Trading Day of an expiring Contract Month.
Trading Hours
The Trading Hours shall be 1000 to 2000 SGT (1900 SGT during British Summer Time).
Trading Days
Trading shall be conducted Monday through Friday.
Last Trading Day
The Last Trading Day for SMX MBIO Futures Contracts shall be last Business Day of the maturing Contract Month, unless such Business Day is a national public holiday in People’s Republic of China (PRC), then the Last Trading Day shall be the first preceding Business Day which is not a PRC holiday.
Daily Price Range
The Daily Price Range (DPR) on any bids or offers to buy or sell SMX MBIO Index Futures Contracts shall be plus or minus ten percent (10%) of the previous days’ Daily Settlement Price (“Limit”).
If this limit is reached, there shall be a five (5) minutes Cooling-Off Period and thereafter a five percent (5%) increased limit shall be applied.
If this enhanced limit is reached, there shall be a further five (5) minutes Cooling-Off Period and thereafter a final five percent (5%) increased limit (‘Final Limit’) shall be applied.
During the Cooling-Off Periods, trading may continue at a price that does not violate the existing DPR. Where the Final Limit is reached, trading may continue during the balance of normal trading hours at a price that does not violate the Final Limit.
Position Limits
The Customer level limit shall be not more than 70,000 Contracts net long or net short in all Contract Months combined, unless a Customer has received a Position Limit Exemption as provided for and governed by SMX Notice 3004 and any subsequent changes specified by the Exchange and/or Clearing Corporation in an amendment or new Notice as may be issued from time to time. The Customer level limit shall also apply to each Broker Member, Trade Member and Remote Member Proprietary Account.
The Member level limit, being applied to each Broker Member’s and Remote Member’s combined Customer and Proprietary Accounts, shall be not more than the higher of 200,000 Contracts net long or net short in all Contract Months combined or twenty-five percent (25%) of open interest in all Contract Months combined, unless Customer(s) of such Member or the Member itself has received a Position Limit Exemption as provided for and governed by SMX Notice 3004 and any subsequent changes specified by the Exchange and/or Clearing Corporation in an amendment or new Notice as may be issued from time to time.
Daily Settlement Price
The Daily Settlement Price (DSP) shall be computed and published as provided for and governed by SMX Notice 3005 and any subsequent changes specified by the Exchange and/or Clearing Corporation in an amendment or new Notice as may be issued from time to time.
Final Settlement Price
The Exchange shall publish a Final Settlement Price (FSP) which shall be the settlement price of MBIO Index as published by Metal Bulletin Limited on the Last Trading Day.
Final Settlement
All remaining open positions at the end of trading on the Last Trading Day for the Contract Month shall be cash-settled at the Final Settlement Price.
Exchange for Physical (EFP)/Exchange for Swaps (EFS) Transactions
EFP and EFS transactions shall be allowed in a manner as provided and governed by SMX Notice 3006 and any subsequent changes specified by the Exchange and/or clearing Corporation in an amendment or new Notice as may be issued from time to time.

Underlying Market

  • The physical market for iron ore is valued at about $ 200 billion a year, making it second only to the market for crude oil.
  • China alone accounts for more than $ 100 billion of this market, with production at 250 million tonnes (based on equivalent grade 62% Fe) and imports of 619 million tonnes.
  • Thus, iron ore is the single largest commodity in the world without a futures market associated with it.

Evolution of the spot market

  • The production and sale of iron ore is concentrated across several very large as well as numerous medium sized producers. The market had been characterised by a system of annual contract prices for 40 years, until recently, when the mining majors shifted to shorter quarterly contracts.
  • This new development goes hand-in-hand with the evolving spot market for iron ore. It is estimated that currently 30 percent of iron ore is sold in the spot market. Market participants see this number growing to 60 percent over the next five years, as existing accords expire and are not renewed.
  • Spot pricing exposes producers, consumers and traders to price volatility and from the perspective of physical market participants there is a growing need to hedge this price exposure.

Metal Bulletin Iron Ore Index

  • The SMX and Metal Bulletin have partnered to develop the world’s first iron ore futures contract to be traded on a global platform.
  • The Metal Bulletin Iron Ore (MBIO) Index is a tonnage weighted calculation of actual transactions normalized on iron ore content and freight to 62% iron content, cfr Qingdao, China. Transactions from 58% to 66% are eligible and are normalized within the methodology to 62%. Data is submitted by all segments of the industry; producers, consumers and the trade.
  • Metal Bulletin is completely impartial and seeks to report an open and transparent representation of the market. In addition, Metal Bulletin has a strategic relationship with Steelhome, the leading independent Chinese steel consultancy and data provider, to maximize the robustness of the Index. Steelhome will supply daily data from its widespread contact base of steel producers and iron ore traders within China. Neither Metal Bulletin nor Steelhome has any financial interest in the level or direction of the Index.
  • The MBIO Index is the first and only daily iron ore price index with an integrated Chinese data provider partner.

Disclaimer: The information and contents (the 'Contents') are provided without warranties of any kind. SMX and/or its officers and employees do not warrant and hereby disclaim any warranty as to the accuracy, correctness, reliability, currentness, timeliness, non-infringement, title, merchantability or fitness for any particular purpose of the Contents. SMX and/or it officers and employees shall not be liable for any damage or loss of any kind, howsoever caused as a result (direct or indirect) of the use of the Contents, including but not limited to any damage or loss suffered as a result of reliance on the Contents. The Contents do not constitute professional advice or provision of any kind of services and should not be relied upon as such. SMX and/or its officers and employees do not make any recommendation and assume no responsibility towards any investments or trading in commodities or commodity futures done based on any information given in the Contents and any such investment or trade is subject to investment and commercial risks for which SMX and/or its officers and employees shall not be responsible. If financial, investment or any other professional advice is required, please seek the advice of competent professionals.

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