OREANDA-NEWS. March 21, 2014. ICBC has recently launched automatic oil contract renewal function, and lowered the price spreads across the board to facilitate retail customers in account crude oil trading via cheaper and easier-to-use service, according to an announcement of the Bank.   

In March 2013, ICBC became the first bank in China to launch crude oil trading service via account. The prices are based on the underlying crude oil future contracts as traded on major international exchanges. As quoted prices and underlying crude oil have expiry dates, crude oil contracts also have fixed maturity date.

Investors intended for successive investment must sell (buy) the crude oil in last tranche and buy (sell) the crude oil in next tranche. In an effort to improve customer experience, ICBC has developed an innovative function of automatic renewal for account crude oil product, which allows successive oil buying or selling at a lower cost. The new function enables, upon instruction from customers, automatic closing of earlier-tranche position and opening of next-tranche position within the renewal period. The renewal can be classified into three types, namely real time renewal, renewal on designated date and renewal upon expiry.       

In general, investors need to place two orders to renew contract. However, the new service saves investors’ renewal cost with favorable price spreads, and streamlines procedure to meet demand for successive trading, which helps investors more reasonably allocate investment portfolio and make informed investment decisions based on dynamics in international oil markets.

In addition, ICBC lowered the bid-ask spread as from February 24, further reducing transactional cost for investors. The bid-ask spreads for crude oil traded during Asia hours are down by USD 0.20 per barrel traded in US dollar and RMB 1.20 per barrel traded in yuan. The bid-ask spreads for crude oil traded during Europe/US hours were lowered by USD 0.10 per barrel traded in US dollar and RMB 0.62 per barrel traded in yuan.