Lithium prices, page-872

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PatienceToWin

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06/12/23

06:17

Post #: 71291680
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Originally posted by Stephan90: ↑

These changes make futures trading less attractive if you do it merely for price speculation (without the intent of taking or making delivery of the underlying asset e.g. lithium carbonate) because you need bigger price moves for your trade to become profitable. (You need to open & close your position later) If you open a position either long or short you pay 3.2 % of trade volume as a fee to the futures exchange and if you close that position later by doing the opposite trade again (because you want to speculate on the price but don't want to take or make phsyical delivery, which was the original purpose of why futures were invented in the first place) then you would need to pay an equal fee again. At least that is how I understand this announcement.

Why does the futures exchange make these changes!? Apparently, the total trade volume is very high right now (probably because of mass speculation on falling lithium prices) so that the futures exchange can afford to ask for such high fees and make more money $$$ even if this reduces the trade activity. Increasing the fees by three times sound like an extreme measure to me. 3.2 % fee sounds significant.

Why does the futures exchange reduce the number of maximum 2,000 contracts per company / customer!? Apperently, traders have opened very large positions (bets) that the futures exchange considers too risky and it is afraid that some customers could default on their obligations if the bets don't go their way. Maybe the government approached the futures exchange and told them to limit the risk associated with their futures trading offer (just speculation)

This is my interpration of this news.

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Well that is good news as it would lead to less "paper" trading "speculators " and provide more accurate future prices which may be the reason for the continued fall in the China lithium spot price , so could lead to a quick turnaround and hence a short squeeze, thanks PTW

AKE Price at posting: $8.30 Sentiment: Buy Disclosure: Held
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0 Great analysis

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Lithium prices, page-872

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