The Shanghai Futures Exchange will suspend trading in two of its copper futures contract months on Wednesday, after those months fell by their daily trading limit for three days running, the exchange said.
The suspension of the two contracts, which are not the most heavily traded in Shanghai, is obligatory under exchange rules that limit volatility with daily trading bands.
Copper futures on the London Metal Exchange have shed more than 20 percent since their early May peak, as investors cut positions in commodities, equities and emerging markets. This has helped drag down Shanghai futures.
Shanghai's most active contracts, August and September, ticked up by a whisker on short-covering late on Tuesday, thus narrowly avoiding a forced suspension that would have increased Chinese investors' exposure if international contracts continue to fall on Wednesday. The front-month June contract and the October contract will both be suspended for one day, the exchange said on its web site (www.shfe.com.cn).
Shanghai copper futures may rise or fall by 4 percent on any given trading day. If they hit the limit, the band is widened by 1 percent each day for the following two trading days, before trading is suspended on the fourth day, according to exchange rules introduced last year. Traders said Shanghai copper contracts hadn't hit their limits for three days running since the new limits were introduced.
On Wednesday, the August and September contracts will revert to a 4 percent limit. The July, November, December, January and March contracts may trade up or down by 6 percent.
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