Shanghai's pilot free trade zone has released draft rules for spot trading of commodities, a step closer to establishing international trading exchanges for various commodities in the FTZ.

The 48-item draft specifies requirements for market participants, trading methods, regulations on fund management and product delivery as well as risk control measures.

“The release of the draft is a step toward building international resource allocation platforms for energy products, raw industrial materials and agricultural products,” the China (Shanghai) Pilot Free Trade Zone Administration said in a statement on its website.

The zone will allow the transactions of bonded commodities as well as warehouse receipts and bills of lading of underlying bonded commodities. Commodities traded in the FTZ should be at pretax prices that exclude import tariffs and value-added taxes. Trading of commodities will adopt yuan-denominated quotation and settlement.

The rules also require commodity market operators to employ separate third-party institutions to take care of fund custody, fund settlement and commodity warehousing.

Both domestic and foreign enterprises engaged in commodity-related trading, production, and processing are qualified to become commodity dealers under the rule.

The regulator is soliciting public opinion on the draft until next Monday.

The zone has already set up an international gold board to boost China’s voice in the global bullion market.

The Shanghai government has said earlier it plans to set up eight international platforms to trade oil, gas, iron ore, cotton, liquid chemicals, silver, bulk commodities and nonferrous metals in the zone by 2015 as the city bids to build itself into a global trading hub.