China flags new rules for commodity price indexes from August

BEIJING, June 17 (Reuters) – China said on Thursday it will issue new rules on the management of price indexes for key commodities and services, a move which comes as the government steps up scrutiny of the country’s commodity markets.

The measures, effective from Aug. 1, will standardise how price indexes are compiled and will improve transparency around how information is released, the National Development and Reform Commission (NDRC) said on its official WeChat account.

China’s fast-growing commodity markets are served by many, mostly private index providers who sell price data for major raw materials like grains, metals and crude oil to traders and analysts.

In some cases, the pricing data is used to settle physical trades of commodities.

Under the new rules, price index providers will need to be independent of direct stakeholders in the commodity and service markets covered by the index. Information about the providers and the methods used to develop and formulate the indexes will also need to be fully disclosed.

The commission added that authorities will have the right to review compliance with the rules and take disciplinary measures for non-compliance.

“Financial liberalisation is still a major push and this seems like an effort to make sure investors are confident that private firms providing important data don’t have conflicts of interest,” said Darin Friedrichs, a Shanghai-based senior Asia commodity analyst at brokerage StoneX.

The announcement follows a pledge by the NDRC last week to step up monitoring of commodity prices and strengthen supervision of markets. Producer inflation in the country recently hit its highest in more than 12 years, driven largely by surging commodity costs.

One provider, Cofeed, is believed to have fallen foul of authorities, having suspended its operations without explanation at the end of April and leaving a gap in highly valued information on grain and oilseed supplies in the world’s biggest soybean buyer.

Cofeed had been operating from a villa in the northern outskirts of Beijing, a person familiar with the firm has said. Doors at that address had been sealed by police on April 29, Reuters found.

Reporting by Dominique Patton; Editing by Himani Sarkar

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