Impact Analysis and Investment Strategy Recommendations on the Shanghai Futures Exchange's Tightening of Silver Futures Trading Limits

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The Shanghai Futures Exchange issued the

on , announcing that it would further tighten silver futures trading limits starting from the trading session on [1]. The specific adjustments are as follows:

Adjustment Item	Before Adjustment (effective from December 24, 2025)	After Adjustment (effective from January 9, 2026)
Maximum Intra-Day Open Positions	10,000 lots (AG2602 contract)	7,000 lots (all contracts)
Scope of Application	Individual non-futures company members/clients	Non-futures company members, clients, and overseas special non-brokerage participants
Accounts with Actual Control Relationship	Implemented per individual client	Implemented per individual client (unchanged)
Hedging/Market Making Transactions	Unrestricted	Unrestricted (unchanged)

Since the end of October 2024, silver has overtaken gold to become the strongest-performing asset in the precious metals market. As of the end of December 2025, the London spot silver price has exceeded $60 per ounce, with a year-to-date increase of over 110% [2]. The domestic silver futures front-month contract has also continuously hit record highs, closing at 16,210 yuan per kilogram on December 22, with a daily increase of 6.06% [3].

The current silver market exhibits the following characteristics:

• Volatility reaches a historical peak
  : Multiple institutions have issued risk warnings [4]
• Significant linkage between domestic and overseas markets
  : During the Christmas holiday closure of overseas markets, capital flowed into the Chinese market [5]
• Tight spot supply continues
  : SHFE silver inventories have dropped to 691.638 tons, indicating continuous destocking in domestic inventories [6]
• COMEX registered warehouse receipts are at a relatively low historical level
  : A large amount of silver is locked up by long-term holders, resulting in tight liquid inventories available for delivery [6]

The regulatory authorities have adopted a series of measures recently:

• December 10, 2025: Margin ratio raised to 16%-17%, daily price limit range expanded to 15% [7]
• December 22, 2025: Implemented an intra-day open position limit of 10,000 lots for the AG2602 contract, and adjusted the fee for closing positions opened on the same day [3]
• December 26, 2025: CME Group announced a comprehensive increase in performance margins for metal futures [8]
• January 7, 2026: Further tightened the limit to 7,000 lots [1]

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• Reduced trading capacity
  : The intra-day open position limit has been reduced from 10,000 lots to 7,000 lots, a 30% decrease, directly restricting the space for high-frequency trading and intra-day swing trading [1]
• Cooled market enthusiasm
  : Coupled with the fee adjustment (the fee for closing positions opened on the same day for the AG2602 contract has been adjusted to 0.025%), the cost of speculation has increased [3]
• Reduced capital turnover efficiency
  : Investors with large positions need to split accounts or extend the position-building cycle

Indicator	Expected Change Direction	Degree of Impact
Average Daily Trading Volume	↓ (significant decline in the initial stage)	Gradually stabilizes in the medium term
Bid-Ask Spread	May widen	Increased short-term volatility
Market Depth	Phased reduction	Recovers after position limits are implemented
Position Concentration	Decrease	Conducive to market stability

• Optimized structure of market participants
  : Weeds out over-leveraged speculative capital and attracts long-term allocation capital
• Enhanced price discovery function
  : Reduces noise trading and increases the correlation between prices and fundamentals
• Converged cross-market arbitrage space
  : Fluctuations in the price spread between domestic and overseas markets tend to stabilize

• Liquidity stratification
  : The liquidity gap between front-month contracts and back-month contracts widens
• Weakened linkage between futures and spot markets
  : If futures liquidity contracts excessively, the effect of hedging may be compromised

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• Intra-day high-frequency trading
  : The intra-day open position limit directly restricts strategies involving multiple opening and closing positions within a day
• “Scalping” trading
  : The cost of strategies relying on small fluctuations for quick profits has increased
• Large-scale capital operation
  : Large speculative capital needs to be split into multiple accounts (accounts with actual control relationship are still implemented per individual client) [1]

Investor Type	Degree of Impact	Difficulty of Response
Individual high-frequency speculators	High	Need to significantly reduce trading frequency
Quantitative hedge funds	Medium-High	Need to adjust strategy parameters
Industrial arbitrage capital	Low	Basically unaffected
Hedging enterprises	None	Protected by the policy

According to analysts’ forecasts [2][6], market sentiment will go through the following stages after the policy is introduced:

Stage 1 (1-2 weeks): Sentiment cools rapidly
    ↓
Stage 2 (1 month): Speculative positions take profits, prices fluctuate at high levels
    ↓
Stage 3 (1-3 months): Market returns to rationality, focusing on fundamental factors
    ↓
Stage 4 (after 3 months): New equilibrium forms, trend-driven market dominates

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Strategy Dimension	Adjustment Recommendations	Key Risk Control Points
Daily Open Position Volume	No more than 5,000 lots (with a safety margin)	Strictly comply with the 7,000-lot limit
Position Holding Period	Extended to 3-5 trading days	Avoid frequent intra-day trading
Margin Occupancy	Controlled within 30% of total capital	Set aside sufficient funds to cope with volatility
Stop-Loss Range	Expanded to 5%-8%	Adapt to the expanded volatility range

• Reduce the proportion of intra-day trading
  : From the original 60%-70% to 30%-40%
• Increase swing trading
  : Extend the holding period from 1-3 days to 1-2 weeks
• Reduce the number of opening and closing positions
  : No more than 2 open positions per single product per day

• Prioritize front-month contracts
  : Front-month contracts have more guaranteed liquidity
• Allocate to back-month contracts
  : Appropriately allocate to back-month contracts to diversify liquidity risks
• Replace with inter-month arbitrage
  : Use inter-month spread strategies instead of one-way speculation

# Recommended Stop-Loss Strategy Framework
Stop-Loss Type       | Trigger Condition          | Execution Method
--------------------|---------------------------|-----------------
Technical Stop-Loss | Price breaks below key support level | Execute immediately
Time Stop-Loss      | Position held for more than 3 trading days | Forced liquidation
Volatility Stop-Loss| Daily volatility exceeds 5% | Partial position reduction
Margin Risk Stop-Loss| Margin ratio falls below 50% | Reduce positions or add capital

• Layered position building
  : Initial position building does not exceed 40% of the planned position
• Pyramid-style position adding
  : Add positions in batches after confirming the trend
• Total position control
  : Total positions in precious metal products do not exceed 30% of the account

Analysts recommend [6][7]:

• Prioritize gold allocation
  : As the core long position base
• Allocate to silver as a supplement
  : Treat it as an “amplifier” of sentiment fluctuations
• Ratio adjustment
  : Adjust the gold-to-silver ratio from 1:2 to 2:1 or higher

Market Stage	Gold Proportion	Silver Proportion	Other Assets
Trend Confirmation Period	50%	25%	25%
High-Level Volatility Period	60%	15%	25%
Risk Release Period	70%	10%	20%

• Strategy selection
  : Focus on trend following, reduce market timing
• Position control
  : Positions in a single product do not exceed 10% of total capital
• Trading frequency
  : No more than 2 trades per week
• Recommendation
  : Wait for the gold-silver ratio to rebound and silver prices to stabilize before buying on dips [2]

• Strategy selection
  : Combine hedging with trend following
• Position utilization
  : Make full use of hedging quotas
• Hedging tools
  : Use options to build protection strategies

• Hedging strategy
  : Apply for hedging quotas normally
• Risk management
  : Use the futures-to-spot mechanism to optimize costs
• Delivery preparation
  : Prepare delivery funds and warehouses in advance

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Risk Type	Details	Response Strategy
Policy Risk	The exchange may introduce further restrictive measures	Remain compliant and reserve room for adjustments
Volatility Risk	Intra-day price fluctuations may intensify	Expand stop-loss range and increase margin
Liquidity Risk	Liquidity may dry up in extreme market conditions	Avoid chasing gains and selling on dips
Macroeconomic Risk	Geopolitical conflicts, changes in Federal Reserve policies	Focus on fundamentals and control exposure

• The speculative boom gradually fades, and prices fall back to a reasonable range
• The gold-silver ratio is expected to find support in the range of 45-55 [2]
• Increased volatility will become the new normal

• The foundation of the structural bull market remains unchanged
• The supply gap in 2026 is still expected to exceed 2,900 tons [6]
• Seek layout opportunities after risks are released

• Pay attention to the Federal Reserve’s interest rate cut path
• Pay attention to the continuous pull on silver demand from AI industrialization
• The allocation value of precious metals remains under the theme of de-dollarization

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The Shanghai Futures Exchange’s tightening of silver futures trading limits is a necessary measure to prevent market risks and regulate trading activities. In the short term, this policy will lead to phased contraction of market liquidity and cooled speculative sentiment; however, in the medium to long term, it is conducive to the healthy development of the market and promotes the return of prices to fundamentals.

1. Strictly comply with regulations
   : Adhere to the 7,000-lot intra-day open position limit
2. Reduce trading frequency
   : Reduce intra-day trading and increase swing trading
3. Strengthen risk control
   : Expand stop-loss ranges and set aside more margin
4. Optimize allocation
   : Increase the proportion of gold allocation and treat silver as a supplementary product
5. Be patient
   : Wait for the market to stabilize before actively deploying positions

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[1] Shanghai Futures Exchange - Notice on Adjusting Trading Limits for Silver Futures Contracts (https://www.shfe.com.cn/publicnotice/notice/202601/t20260107_830046.html)

[2] Securities Times - The Shadow of Historical Crashes Lingers: How Will Silver’s Outlook Unfold After the “Plunge”? (https://www.stcn.com/article/detail/3565524.html)

[3] Sina Finance - Implement Trading Limits and Adjust Transaction Fees! Shanghai Futures Exchange Takes Action on Silver Futures! (https://finance.sina.com.cn/stock/zqgd/2025-12-22/doc-inhcsvvh1464109.shtml)

[4] Securities Times - Silver Volatility Reaches a Historical Peak, Multiple Institutions Issue Risk Warnings (http://mp.cnfol.com/27756/article/1766632049-142184378.html)

[5] Futures Daily - Silver Volatility Reaches a Historical Peak, Multiple Institutions Issue Risk Warnings

[6] Sina Finance - Decoding the New Main Line of Metals: Gold and Silver Start with a Bang! Can the “Big Bull Run” Continue? (https://www.xincai.com/article/nheypcx1489340)

[7] Phoenix Net Finance - Silver Surges! Shanghai Futures Exchange Takes Latest Action (https://finance.ifeng.com/c/8ozLLt0RobD)

[8] Securities Times - Relevant Reports on Silver Futures

[9] Shinnytech - Interpretation of Shanghai Futures Exchange Silver Futures Business Rules (https://www.shinnytech.com/articles/business-rules/products/shfe.ag)