Regulations on Administration of Futures Trading
2019-12-12
Regulations on Administration of Futures Trading (March 14, 2008)
26-07-2009
(Decree No.489 of the State Council promulgated on March 6, 2007)
Chapter I General Provisions
Chapter II Futures Exchanges
Chapter III Futures Companies
Chapter IV Basic Rules for Futures Trading
Chapter V Futures Associations (Suspended)
Chapter VI Supervision and Administration
Chapter VII Legal Liabilities
Chapter VIII Supplementary Provisions
Chapter I General Provisions
Article 1 The Regulations are enacted to regulate the futures transactions, strengthen the supervision and administration over the futures trading, and maintain the order of the futures market, so as to prevent the risks, protect the legal rights and interests of all parties of futures transactions and the social public interests and promote the active and steady development of the futures market.
Article 2 The Regulations shall be complied with by units and individuals, who engage in the futures trading, including the transactions of commodity and financial futures contracts and option contracts and relevant activities.
Article 3 Futures transactions shall follow the principles of openness, fairness, justness, honesty and credibility. Illegal activities including frauds, insider dealing and manipulation of futures transactions prices are prohibited.
Article 4 Futures transactions shall be conducted at legally established futures exchanges or other trading venues approved by the futures supervision and administration authority of the State Council.
Futures transactions conducted in any other places are prohibited and no futures transactions in disguised forms are allowed.
Article 5 The futures supervision and administration authority of the State Council implements centralized and unified supervision and administration over the futures market.
The agencies of the futures supervision and administration authority of the State Council shall fulfill their duties of supervision and administration according to relevant stipulations in the Regulations and the authorization of the futures supervision and administration authority of the State Council.
Chapter II Futures Exchanges
Article 6 The establishment of futures exchanges shall be examined and approved by the futures supervision and administration authority of the State Council.
No unit or individual is allowed to set up a futures exchange or organize futures transactions and relevant activities in any form without approval by the futures supervision and administration authority of the State Council.
Article 7 Futures exchanges, non-profit shall carry out the self-regulation according to their constitutions and assume the civil liabilities with all their properties. The persons in charge of futures exchanges shall be appointed and dismissed by the futures supervision and administration authority of the State Council.
The administrative measures for futures exchanges shall be formulated by the futures supervision and administration authority of the State Council.
Article 8 Members of futures exchanges shall be corporations or other economic organizations registered in the People’s Republic of China.
Futures exchanges can carry out the member classification clearing system, and their members can be divided into clearing members and non-clearing members.
The certificate for clearing business of clearing members shall be approved by the futures supervision and administration authority of the State Council, which shall make decision on approval or non-approval within 3 months since the day when accepting the application for clearing business certificate.
Article 9 One who is under the circumstance prescribed in Article 147 of the “Company Law of the People’s Republic of China” or is under any of the following circumstances shall not hold the position of principal or financial accountant of the futures exchange:
(1) It has been not more than 5 years since the day when principals of futures exchanges, stock exchanges and securities depository and clearing institutions, or directors, supervisors and senior management of futures companies and securities companies, and other personnel prescribed by the futures regulatory authority of the State Council were dismissed from their positions due to illegal activities;
(2) It has been not more than 5 years since the day when qualifications of the lawyers, certificated public accountants or the professionals of investment consulting institutions, financial consulting institutions, credit rating institutions, asset appraisal institutions and verification institutions were revoked due to illegal activities.
Article 10 The futures exchanges shall establish and perfect all the rules and regulations according to the provisions of the Regulations and the futures regulatory authority of the State Council to strengthen the risk control of transactions and the regulation of members and staff of the exchanges. The futures exchanges shall perform the following duties:
(1) providing the sites, facilities and services for trading;
(2) making the contracts and arranging for the listing of the contracts;
(3) organizing and regulating the trading, settlement and delivery;
(4) ensuring the fulfillment of the contract;
(5) conducting regulation towards the members according to the constitutions and trading rules;
(6) other duties prescribed by the futures regulatory authority of the State Council.
The futures exchanges shall not participate in the futures trading directly or indirectly. The futures exchanges shall not carry out the business having no relation with their duties including trust investment, stock investment and non-self-used real estate investment without examination and verification by the futures regulatory authority of the State Council and approval of the State Council.
Article 11 The futures exchanges shall establish and prefect the following risk management systems according to relevant regulations of the state:
(1) the deposit system;
(2) the mark to market settlement system;
(3) the price limit system
(4) the system for position limit and large position report;
(5) the risk reserve system;
(6) other risk management systems prescribed by the futures regulatory authority of the State Council.
The futures exchanges implementing the classified settlement system for members shall establish and perfect the settlement deposit system as well.
Article 12 When abnormal conditions appear in the futures market, the futures exchanges can decide to take the following emergency measures according to the limit and procedures prescribed by their constitutions, and shall report to the futures regulatory authority of the State Council immediately:
(1) increasing the deposit;
(2) adjusting the price limit;
(3) limiting the maximum position of members or clients;
(4) suspending the trading temporarily;
(5) other emergency measures.
The aforesaid abnormal conditions refer to the activities of manipulating the trading prices of futures or the irresistible emergencies occurred in the trading, and other conditions prescribed by the futures regulatory authority of the State Council.
After the abnormal conditions disappear, the futures exchanges shall cancel the emergency measures in time.
Article 13 The futures exchanges shall conduct the following issues upon approval by the futures regulatory authority of the State Council:
(1) formulating or modifying constitutions and trading rules;
(2) carrying out the listing of trade varieties, and terminating, cancelling or resuming the trading of the trade varieties;
(3) listing, modifying or terminating the contracts;
(4) changing the domiciles or business sites;
(5) merger, separation or dissolution;
(6) other issues prescribed by the futures regulatory authority of the State Council.
The futures regulatory authority of the State Council shall ask for the advice of relevant authorities of the State Council when approving the listing of new trade varieties at the futures exchanges.
Article 14 The incomes of the futures exchanges shall be managed and used according to relevant regulations of the state, with the priority given to the operation and improvement of the sites and facilities of the futures exchanges.
Chapter III Futures Companies
Article 15 The futures exchanges are the financial institutions engaging in futures business established according to the provisions of the “Company Law of the People’s Republic of China” and the Regulations. The establishment of a futures company shall be approved by the futures regulatory authority of the State Council and registered at the company registration authority.
Without the approval of the futures regulatory authority of the State Council, no unit or individual can establish the futures company to do futures business or in disguised form.
Article 16 The applicant for establishing the futures company shall meet the provisions in the “Company Law of the People’s Republic of China” and meet the following conditions:
(1) the minimum amount of the registered capital is RMB30 million;
(2) directors, supervisors and senior management have the qualifications for their positions and practitioners have the qualifications for futures trading.
(3) there exists the Articles of Association in accordance with laws and administrative regulations;
(4) major shareholders and actual controller have the capacity of continuous profit-making, with good credit and without records of significant illegal activities in the recent 3 years;
(5) there are qualified business sites and facilities;
(6) there are complete systems for risk management and internal control;
(7) other conditions prescribed by the futures regulatory authority of the State Council.
The futures regulatory authority of the State Council can raise the minimum amount of the registered capital according to the prudential regulatory principle and the risk levels of various business. The registered capital shall be the paid-up capital. The shareholders shall contribute in cash or with the non-currency assets needed for the operation of futures companies, with the proportion of contribution in cash not less than 85%.
The futures regulatory authority of the State Council shall make the decision of approval or disapproval within 6 months since the day when it accepts the application of establishment of the futures company upon verification according to the prudential regulatory principle.
Without the approval of the futures regulatory authority of the State Council, no unit or individual can entrust others person with or accept other person’s commission of holding or managing the equity of the futures company.
Article 17 The permit system shall be implemented towards the business of futures company, with the permit license issued by the futures regulatory authority of the State Council according to the kind of commodity futures and financial futures business of the futures company. In addition to the domestic futures brokage business, the futures company can also apply for the overseas futures brokage business, futures investment consulting business and other futures business prescribed by the futures regulatory authority of the State Council.
The futures companies are prohibited to carry out the activities having no relation with the futures business, excluding those prescribed by laws, administrative regulations or the futures regulatory authority of the State Council.
The futures companies are prohibited to carry out or in disguised form the self-operated futures business.
The futures companies are prohibited to provide financing for their shareholders, actual controllers or other related parties, or provide the outward guarantees.
Article 18 The futures companies conduct the brokerage business, accept the clients’ commissions and conduct the futures trading for the clients in the futures companies’ names, with the trading results assumed by the clients.
Article 19 The futures companies shall handle the following issues upon approval of the futures regulatory authority of the State Council:
(1) merger, separation, suspension, dissolution or bankruptcy;
(2) changing the form of the company;
(3) changing the business scope;
(4) changing the registered capital;
(5) changing the equity of more than 5%;
(6) the establishment, purchase, stake-taking or termination of the overseas futures business institution;
(7) other issues prescribed by the futures regulatory authority of the State Council.
For the aforesaid issues listed in items (4) and (7), the futures regulatory authority of the State Council shall make the decision of approval or disapproval within 20 days since the day when the application is accepted; for the rest of the issues, the futures regulatory authority of the State Council shall make the decision of approval or disapproval within 2 months since the day when the application is accepted.
Article 20 The futures companies shall handle the following issues upon approval of the agencies of the futures regulatory authority of the State Council:
(1) changing the legal representative;
(2) changing the domicile or the business site;
(3) the establishment or termination of the domestic branch;
(4) changing the business site, person-in-charge or business scope of the domestic branch;
(5) other issues prescribed by the futures regulatory authority of the State Council.
For the issues listed in the aforesaid items (1), (2), (4) and (5), the agency of the futures regulatory authority of the State Council shall make the decision of approval or disapproval within 20 days since the day when the application is accepted; for the issue in the aforesaid item (3), the agency of the futures regulatory authority of the State Council shall make the decision of approval or disapproval within 2 months since the day when the application is accepted.
Article 21 If the futures company or its branch is under the circumstance prescribed in Article 70 of the “Company Law of the People’s Republic of China” or is under any of the following circumstances, the futures regulatory authority of the State Council shall handle the procedures for cancelation of the license for futures business:
(1) the business license is cancelled by the company registration authority according to laws;
(2) failing to start the business for more than 3 months after the establishment, or continuous suspension of business for more than 3 months after the opening without proper reasons;
(3) applying for cancellation on its own initiative;
(4) other circumstances prescribed by the futures regulatory authority of the State Council.
The futures companies shall settle relevant futures business and return the deposits and other assets to the clients before cancelling the futures business licenses. The branches of the futures companies shall terminate the business and dispose the clients’ assets properly before cancelling the business licenses.
Article 22 The futures companies shall establish, perfect and strictly implement the business management rules and risk management system, observe the information disclosure system, ensure the safety of the clients’ deposits, and report the list of large stakeholders and trading information to the futures exchanges according to the regulations of the futures exchanges.
Article 23 Other futures business institutions engaging in the futures investment consulting and providing the business including the intermediate introduction for the futures companies shall obtain the business qualifications approved by the futures regulatory authority of the State Council. The specific administration measures will be formulated by the futures regulatory authority of the State Council.
Chapter IV Basic Rules for Futures Trading
Article 24 Only the members of the futures exchanges can conduct the futures trading at the futures exchanges.
Article 25 Before conducting the futures trading for the clients upon commission by them, the futures companies shall show the risk disclosure statement to the clients, make them sign for confirmation and then sign the written contracts with them. The futures companies shall not conduct the futures trading without the commissions of the clients or not in accordance with the contents of the clients’ commissions.
The futures companies shall not make the promises of making profit to the clients and shall not stipulate profits sharing or joint risk bearing with the clients during the brokage business.
Article 26 The following units or individuals shall not conduct the futures business and the futures companies shall not accept their commissions to conduct the futures trading for them:
(1) state organs and institutions;
(2) staff of the futures regulatory authority of the State Council, futures exchanges, futures deposits security regulatory authority and futures association;
(3) people who are prohibited to enter into the securities and futures markets;
(4) units and individuals who fail to provide the account-opening certificate materials;
(5) other units and individuals who cannot conduct the futures trading prescribed by the futures regulatory authority of the State Council.
Article 27 The clients can give the trading instructions to the futures companies in written form, by telephone and internet or by other ways prescribed by the futures regulatory authority of the State Council. The trading instructions of the clients shall be specific and complete.
The futures companies shall not conceal significant issues or use other unfair means to inveigle the clients into giving the trading instructions.
Article 28 The futures exchanges shall publish in time the trading volume, knock down price, position volume, maximum and minimum prices, opening and closing prices and other real-time market information needed to be published, and shall ensure the authenticity and accuracy of the real-time market information. The futures exchanges shall not publish the information about price prediction.
Without approval of the futures exchanges, no unit or individual can publish the real-time market information of the futures trading.
Article 29 The deposit system shall be strictly implemented during the futures trading. The deposits charged by the futures exchanges and futures companies towards their members and clients shall not be lower than the standards made by the futures regulatory authority of the State Council and the futures exchanges and shall be saved in the special accounts, separate with their own funds.
The deposits charged by the futures exchanges towards their members belong to the members and shall not be embezzled except being used for the trading settlement of the members.
The deposits charged by the futures companies towards their clients belong to the clients and shall not be embezzled except the following transfer circumstances:
(1) paying the usable funds according to the clients’ requirements;
(2) depositing the deposits and paying the commission charges and taxation for the clients;
(3) other circumstances prescribed by the futures regulatory authority of the State Council.
Article 30 The futures companies shall open the special account and set the trading code for every client and shall not conduct the trading with mixed codes.
Article 31 The futures companies conducting the futures brokage business as well as other futures businesses shall implement the system of business separation and fund separation; the mixed operation is prohibited.
Article 32 The members and clients of the futures exchanges can conduct the futures trading by taking the securities such as standard warehouse receipts and treasury bonds, which have the stable values and strong liquidities, as the deposits. The varieties, the price calculation methods of the securities and the offsetting proportion of the deposits will be prescribed by the futures regulatory authority of the State Council.
Article 33 The qualifications for conducting the business of deposit saving and futures settlement of the banking financial institutions shall be approved by the futures regulatory authority of the State Council upon examination, verification and approval by the banking regulatory authority of the State Council.
Article 34 The clearing members of the futures exchanges, futures companies and non-futures companies shall withdraw, manage and use the risk reserves according to the regulations prescribed by the futures regulatory authority and financial department of the State Council; the appropriation is prohibited.
Article 35 The charge items, charge standards and management methods of the futures trading shall be unitedly formulated and promulgated by relevant authorities of the State Council.
Article 36 The futures trading shall be conducted through the public centralized way or other ways approved by the futures regulatory authority of the State Council.
Article 37 The settlement of the futures trading shall be unitedly organized by the futures exchanges.
The futures exchanges shall implement the mark to market settlement system and inform their members of the settlement result on the very day.
The futures companies shall conduct the settlement for the clients according to the settlement results of the futures exchanges and inform the clients of the settlement results in time through the ways stipulated with the clients. The clients shall check in time and appropriately dispose their trading positions.
Article 38 The members of the futures exchanges shall complement the deposits or close the positions by themselves when their deposits are insufficient. If any member fails to do so within the period prescribed by the futures exchange, the futures exchange shall close the member’s position mandatorily, with relevant fees and losses caused by the mandatory position closing assumed by the member.
The clients shall complement the deposits or close the positions by themselves when their deposits are insufficient. If any client fails to do so within the period prescribed by the futures company, the futures company shall close the client’s position mandatorily, with relevant fees and losses caused by the mandatory position closing assumed by the client.
Article 39 The delivery of the futures trading shall be unitedly organized and conducted by the futures exchanges.
The delivery warehouse shall be designated by the futures exchange. The futures exchange shall not limit the total amount of the practical delivery and shall sign the agreement with the delivery warehouse to specify the rights and obligations of the two parties. The delivery warehouse is prohibited from the following activities:
(1) issuing false warehouse receipts;
(2) violating the business rules of the futures exchanges to limit the warehousing and withdrawing of the delivered commodity;
(3) revealing the business secret related to the futures trading;
(4) violating relevant regulations of the state to participate in the futures trading;
(5) other activities prescribed by the futures regulatory authority of the State Council.
Article 40 If a member breaks the contract in the futures trading, the futures exchange shall assume the obligation of breach of the contract with the member’s deposit firstly; if the deposit is insufficient, the futures exchange shall use the risk reserve and its own funds to assume the obligation of breach of the contract for the client and then obtain relevant right of recourse against the client.
If a client breaks the contract in the futures trading, the futures company shall assume the obligation of breach of the contract with the client’s deposit firstly; if the deposit is insufficient, the futures company shall use the risk reserve and its own funds to assume the obligation of breach of the contract for the client and then obtain relevant right of recourse against the client.
Article 41 The futures exchange which implements the classified settlement system for members shall charge the settlement deposits towards its clearing members. The futures exchange conducts the settlement and charges and collects the deposits only towards its clearing members, assumes the obligations of breach of contracts with the settlement deposits, risk reserves and its own funds for them, and takes other relevant measures. The clearing members conduct the settlement, charge and collect the deposits towards the non-clearing members, assume the obligations of breach of contracts and take other relevant measures.
Article 42 Clearing members of the futures exchanges, futures companies and non-futures companies shall ensure the completeness and safety of the documents of futures trading, settlement and delivery.
Article 43 No unit or individual is allowed to make up or spread false information about the futures trading. Malicious collaboration, joint transaction or manipulating the futures trading prices in other forms is prohibited.
Article 44 No unit or individual is allowed to use the credit funds or financial funds to conduct the futures trading against the regulations.
The qualifications for banking financial institutions to engage in the futures trading financing or guarantee business should be approved by the banking regulatory authority of the State Council.
Article 45 In domestic and overseas futures trading, the state-owned and state-controlled companies shall comply with the hedging principle and strictly observe relevant regulations on companies entering the futures market with stated-owned assets issued by the state-owned assets regulatory authority or other relevant departments of the State Council.
Article 46 The commercial department of the State Council shall verify and approve the varieties of the overseas futures trading dealt with by the domestic businesses or individuals.
The purchase, settlement and receipts and payments of foreign exchange in overseas futures trading should be in line with the relevant foreign exchange regulations of the state.
Rules for domestic units or individuals on dealing with overseas futures trading are formulated by the futures regulatory authority of the State Council jointly with relevant departments including the commercial department, the state-owned assets regulatory authority, the banking regulatory authority and the foreign exchange management authority of the State Council, and will take effect after being approved by the State council.
Chapter V Futures Associations
Article 47 The futures association is a self-disciplined organization and social organization of the futures industry.
The futures companies and other institutions specializing in futures business shall join the futures association and pay the membership fees.
Article 48 The power organ of the futures association is the members’ assembly consisting of all members.
The constitutions of the futures association is formulated by the members’ assembly and put on record by the futures regulatory authority of the State Council.
A council is set up in the futures association, with its members elected according to the constitutions.
Article 49 The futures association shall perform the following duties:
(1) educating and organizing the members to observe the laws, regulations and policies of the futures;
(2) formulating the industry self-discipline rules which should be observed by the members, supervising and examining the members’ behaviors and giving disciplinary punishments to those violating the constitutions of the association and the self-discipline regulations;
(3) being responsible for the recognition, management and cancellation of the qualifications of the futures practitioners;
(4) answering the clients’ complaints about the futures business and mediating the disputes between members and members and their clients;
(5) protecting the legal rights and interests of the members according to laws and reflecting members’ advices and requirements to the futures regulatory authority of the State Council;
(6) organizing the business training for the futures practitioners and carrying out the business communication among the members;
(7) organizing the members to research in the development, operation and relevant contents of the futures industry;
(8) other duties prescribed in the constitutions of the futures association.
All the business activities of the futures association shall be directed and supervised by the futures regulatory authority of the State Council.
Chapter VI Supervision and Administration
Article 50 The Futures Regulatory Authority of the State Council (Futures Regulatory Authority) shall supervise and manage the futures market, performing the following duties according to law:
(1) working out relevant rules and regulations on supervision and administration of the futures market and exercising the right of examination and approval according to law;
(2) supervising and managing futures transactions, including listing, trade, settlement and delivery of futures varieties, as well as relevant activities;
(3) supervising and managing futures business activities of relevant market participants, including futures exchanges, futures companies, other futures institutions, clearing members of non-futures companies, monitoring institutions for safe deposit and management of futures margin (margin monitoring institutions), banks for futures margin deposit and management and delivery warehouses;
(4) working out the qualification standards and administrative measures for futures practitioners and supervising their implementation;
(5) supervising and examining information disclosure of futures transactions;
(6) guiding and supervising the activities of futures associations;
(7) investigating and prosecuting violations of laws and administrative regulations on supervision and administration of the futures market;
(8) conducting international communication and cooperation concerning supervision and administration of the futures market;
(9) other duties regulated by laws and administrative regulations.
Article 51 The Futures Regulatory Authority shall adopt the following measures to perform its duties according to law:
(1) on-the-spot inspection on futures exchanges, futures companies, other futures institutions, clearing member of non-futures companies, margin monitoring institutions and delivery warehouses;
(2) entering the sites of suspicious violations for investigation and evidence collection;
(3) inquiring of the parties concerned and relevant units and individuals involved in the case under investigation and requesting them to explain issues related to the aforesaid case;
(4) consulting and copying relevant property right registration materials concerning the case under investigation;
(5) consulting and copying relevant documents and materials including the futures transaction records and financial accounting materials of the parties concerned and relevant units and individuals involved in the case under investigation; sealing up and protecting the documents and materials that may be displaced, hidden or destroyed;
(6) inquiring of the margin account and bank account of the units related to the case under investigation;
(7) restricting the futures transactions of the parties concerned in the case under investigation upon approval by main principals of the Futures Regulatory Authority when investigating into the significant violations such as manipulating futures transaction price and insider dealing; however, the restriction time shall not exceed 15 trading days; it can be extended to 30 trading days, if the case is complicated;
(8) other measures regulated by laws and administrative regulations.
Article 52 The futures exchanges, futures companies, other futures institutions, margin monitoring institutions shall submit the financial accounting reports, business materials and other relevant material to the Futures Regulatory Authority.
The Futures Regulatory Authority shall specially designate persons to audit the annual reports submitted by futures companies and other futures institutions and then formulating the audit reports. The auditors shall sign the audit reports. As for the problems found in the auditing, the Futures Regulatory Authority shall adopt corresponding measures in time.
If necessary, the Futures Regulatory Authority can require the clearing members of non-futures companies, delivery warehouses, shareholders and actual controllers of futures companies or other related persons to submit relevant materials.
Article 53 When the Futures Regulatory Authority performs its duties according to law through supervision and examination or investigation, the units and individuals under examination and investigation shall cooperate by providing relevant documents and materials according to the facts and shall not turn down, prevent or conceal relevant information and materials from the Futures Regulatory Authority; so do other relevant departments and units.
Article 54 The state shall set up the guarantee fund for futures investors (the guarantee fund) according to the development of the futures market.
The specific measures on raising, management and usage of the guarantee fund shall be worked out by the Futures Regulatory Authority together with the financial department of the State Council.
Article 55 The Futures Regulatory Authority shall establish and improve the monitoring system for safe deposit and management of futures margin and establish the margin monitoring institutions.
The clients, futures exchanges, futures companies, other futures institutions, clearing members of non-futures companies and banks for futures margin deposit and management shall abide by relevant regulations on monitoring the safe deposit and management of futures margin stipulated by the Futures Regulatory Authority.
Article 56 The margin monitoring institutions shall monitor the security of the futures margin according to relevant regulations and carry out auditing every day. Problems discovered should be immediately reported to the Futures Regulatory Authority, who shall deal with them in time according to different circumstances and relevant stipulations in the Regulations.
Article 57 The Futures Regulatory Authority shall implement the qualification management system towards the directors, supervisors, senior management and other futures practitioners of futures exchanges, futures companies, other futures institutions and margin monitoring institutions.
Article 58 The Futures Regulatory Authority shall formulate the regulations on continuous operation of futures companies, stipulating the risk monitoring indexes of futures companies, including the proportion of net capital to net assets, the proportions of net capital to the business scales of domestic and oversea futures brokerage and the proportion of current assets to current liabilities, as well as raising requirements to futures companies and their branches in such aspects as operation conditions, risk management, internal control, margin deposit and management and connected transactions.
Article 59 If futures companies and their branches violate the regulations on continuous operation or encounter operational risks, the Futures Regulatory Authority shall adopt regulatory measures by conversing with and notifying the futures companies and their directors, supervisors and senior management, and filing the aforesaid situations into their credit records, or order them to conduct rectification within specified period before examining and checking the rectification results.
If futures companies do not correct errors when the time limit expires, and they severely endanger the steady operation and damage the lawful rights and interests of the clients, or are being investigated by the Futures Regulatory Authority for being suspected of severely violating the laws and regulations, the Futures Regulatory Authority shall adopt the following measures according to different situations:
(1) restricting or suspending some futures business;
(2) stopping approval of newly increased business and branches;
(3) restricting the dividend distribution, as well as the rewards and welfare for directors, supervisors and the senior management;
(4) restricting the property transfer and setting other rights over the property;
(5) ordering to change directors, supervisors, the senior management or principals of relevant business departments and branches, or restricting their rights;
(6) limiting appropriation and usage of futures companies’ own funds or risk reserves;
(7) ordering the controlling shareholder to transfer shares or restricting relevant shareholders’ exercise of shareholders’ rights.
The Futures Regulatory Authority shall terminate relevant measures imposed on the futures companies, which have compiled with the stipulation of laws and administrative regulations and met the requirement of the regulations on continuous operation after the rectification, within 3 days since the completion day of check and acceptance.
As for futures companies, who still do not met the requirement of the regulations on continuous operation after the rectification and whose operation is severely affected, the Futures Regulatory Authority is entitled to revoke the license for some or all of their futures business and close their branches.
Article 60 If there exists illegal operation and significant risks in a futures company, which seriously endangers the order of the futures market and damages the rights and interests of the clients, the Futures Regulatory Authority shall adopt such regulatory measures as ordering it to suspend its business for rectification and designating other institutions for trusteeship and take-over. Upon approval of the Futures Regulatory Authority, the following measures shall be adopted to persons directly in charge of the futures company, including its directors, supervisors and the senior management and other direct responsible persons:
(1) notifying the exit management authority of preventing them from leaving the country according to law;
(2) applying to the judicial authorities for forbidding them from transferring, remising or disposing of the properties in other ways, or setting other rights over the properties.
Article 61 If shareholders of futures companies falsify or withdraw their capital contribution, the Futures Regulatory Authority shall order them to correct the behaviors within specified period and can order them to transfer their shares in the futures companies.
The Futures Regulatory Authority can restrict their shareholder’s rights before they correct the illegal action and transfer their shares in the futures companies according to the aforesaid requirements.
Article 62 The Futures Regulatory Authority can adopt necessary measures for risk disposal when abnormity occurs in the futures market.
Article 63 The trading and settlement software of the futures companies shall meet the requirements of prudent operation and risk management of futures companies and relevant regulations of the Futures Regulatory Authority on monitoring safe deposit and management of futures margin; otherwise, the Futures Regulatory Authority is entitled to require them to improve or change the software.
The Futures Regulatory Authority can require the suppliers of the aforesaid software to provide relevant materials concerning the software and the latter shall cooperate; however, the former has the obligation of confidentiality for the materials.
Article 64 The futures companies, their relevant shareholders and actual controllers shall report the following issues to the Futures Regulatory Authority in written form within 5 days since they happen: the futures companies are involved in the significant litigations or arbitrations; their shares are frozen or used for guarantee; other significant events.
Article 65 When providing relevant services for relevant market participants including futures exchanges and futures companies, the intermediary service institutions, such as the accounting firms, the law offices and the asset appraisal institutions, shall abide by the futures laws, administrative regulations and relevant state regulations, and provide relevant materials according to the requirements of the Futures Regulatory Authority.
Article 66 The Futures Regulatory Authority shall establish the mechanism of information sharing, coordination and cooperation with relevant authorities.
It can also establish the mechanism of supervision, management and cooperation with its counterparts in other countries and regions for cross-border supervision and management.
Article 67 The Staff in relevant units, including the Futures Regulatory Authority, futures exchanges, margin monitoring institutions and banks for futures margin deposit and management, shall be devoted to their duties, abide by laws, be impartial and honest and guard secrets of the state and business secrets of the parties concerned; meanwhile, they shall not take advantage of their positions for illegitimate interests.
Chapter VII Legal Liabilities
Article 68 Clearing members of futures exchanges and non-futures companies with any of the following conduct shall be imposed on correction order, warning, and confiscation of illegal gains:
(1) admission of members in violation of the provisions;
(2) charging of commission fees in violation of the provisions;
(3) use and distribution of income in violation of the provisions;
(4) failing to announce real-time market information or price forecasting information according to the provisions;
(5) failing to fulfill the obligation of reporting to the futures regulatory authority of the State Council according to the provisions;
(6) failing to submit relevant documents or materials to the futures regulatory authority of the State Council according to the provisions;
(7) failing to establish and perfect the clearing guarantee system according to the provisions;
(8) failing to draw, regulate or use loan loss provision according to the provisions;
(9) violating provisions of the futures regulatory authority of the State Council on the safe depository and monitoring of margin;
(10) restricting the practical volume of physical delivery by members;
(11) appointing unqualified futures practitioners;
(12) other actions that violate the provisions of the futures regulatory authority of the State Council.
Disciplinary action with a penalty between RMB10, 000 and RMB100, 000 should be imposed on person-in-charge and other personnel directly responsible for any of the actions prescribed in the preceding paragraphs.
In case of the action prescribed in the 2nd item of the 1st paragraph under this Article, the over-charged commission fees should be returned.
Providing that authorities of safe depository and monitoring of futures margin have the actions prescribed in the 5th, 6th, 9th, 11th and 12th items of the 1st paragraph under this Article, the penalties prescribed in the 1st and 2nd paragraphs should be imposed on them; providing that depositary banks of futures margin have the actions prescribed in the 9th and 12th items of the 1st paragraph under this Article, the penalties prescribed in the 1st and 2nd paragraphs should be imposed on them.
Article 69 Clearing members of futures exchanges and non-futures companies with any of the following conduct shall be imposed on correction order, warning, confiscation of illegal gains and a penalty of one-five times of their illegal gains; in case of no illegal gains or not more than RMB100,000 illegal gains, a penalty of RMB100,000 to RMB500,000 should be imposed; in serious cases, business suspension for rectification should be ordered.
(1) dealing with issues prescribed in Article 13 under this Regulations without approval;
(2) permitting futures trading by members without sufficient margin;
(3) directly or indirectly participating in the futures trading, or engaging in business unrelated to its duties in violation of the provisions;
(4) charging or embezzling margin in violation of the provisions;
(5) forging, altering or failing to keep materials for futures trading, settlement and delivery according to the provisions;
(6) failing to establish or execute the daily mark-to-market system, price limit, position limit and large position reporting system;
(7) refusing or hindering the regulation and inspection by the futures regulatory authority of the State Council;
(8) other actions that violate the provisions of the futures regulatory authority of the State Council.
Disciplinary action with a penalty between RMB10, 000 and RMB100, 000 should be imposed on person-in-charge and other personnel directly responsible for any of the actions prescribed in the preceding paragraphs.
Providing that authorities of safe depository and monitoring of futures margin have the actions prescribed in the 3rd, 7th and 8th items of the 1st paragraph under this Article, the penalties prescribed in the 1st and 2nd paragraphs should be imposed on them.
Article 70 Futures companies with any of the following conduct shall be imposed on correction order, warning, confiscation of illegal gains and a penalty of one-three times of their illegal gains; in case of no illegal gains or not more than RMB100,000 illegal gains, a penalty of RMB100,000 to RMB300,000 should be imposed; in serious cases, the business suspension for rectification or revocation of the license of futures business should be ordered.
(1) accepting entrustment from unqualified units or individuals;
(2) permitting futures trading by clients without sufficient margin;
(3) dealing with issues prescribed in Articles 19 and 20 under this Regulations without approval;
(4) engaging in activities unrelated to the futures business in violation of the provisions;
(5) engagement or disguised engagement in futures proprietary trading;
(6) providing financing or outward guarantees for its shareholders, actual controller or other related parties;
(7) violating provisions of the futures regulatory authority of the State Council on the safe depository and monitoring of margin;
(8) failing to report or submit relevant documents or materials to the futures regulatory authority of the State Council;
(9) having a trading software or settlement software that fails to meet the requirements of futures companies’ prudent operations and risk management and provisions of the futures regulatory authority of the State Council on safe depositary and monitoring of margin;
(10) failing to draw, manage or use loan loss provision according to the provisions;
(11) forging, altering or failing to keep materials for futures trading, settlement and delivery according to the provisions;
(12) appointing unqualified futures practitioners;
(13) forging, falsifying, leasing, lending or purchasing and selling of the license of futures business or business certificate;
(14) engaging in code-mixed trading;
(15) refusing or hindering the inspection by the futures regulatory authority of the State Council;
(16) other actions that violate the provisions of the futures regulatory authority of the State Council.
A warning and penalty between RMB10, 000 and RMB50, 000 should be imposed on the futures company's person-in-charge and other personnel directly responsible for any of the actions prescribed in the preceding paragraphs; in serious cases, the post qualification and futures practitioners qualification shall be suspended or revoked.
Providing that other futures operating agencies other than futures companies have the actions prescribed in the 8th, 12th, 13th, 15th and 16th items of the 1st paragraph under this Article, the penalties prescribed in the 1st and 2nd paragraphs under this Article should be imposed on them.
Providing that the shareholders, actual controller or other related parties of a futures company entrust others or accept entrustment from others with the holding or management of equity of the futures company without approval, or refuse to cooperate with the inspection by the futures regulatory authority of the State Council, or refuse to fulfill the reporting obligation and submit relevant information or materials according to the provisions, or have false record, misleading statement or significant omission in their submitted or presented information or materials, the penalties prescribed in the 1st and 2nd paragraphs under this Article should be imposed on them.
Article 71 If the futures company conducts any of the following fraudulent activities against its clients, it shall be order for correction and warned. Its illegal gains shall be confiscated；meanwhile, a fine of more than one time and less than five times of illegal gains shall be imposed. If there are no illegal gains or the illegal gains don’t reach RMB100,000, a fine of more than RMB100,000 and less than RMB500,000 shall be imposed at the same time. In serious circumstances, the business suspension shall be ordered for rectification or the futures business license shall be revoked.
it promises the client guarantee of profit or fails to produce the risk statement to the client according to the regulations;
it promises to share interest and risk with the client in brokerage business;
it doesn’t obey regulations to accept the client’s entrustment or doesn’t abide by the content of the client’s entrustment to conduct futures transaction without authorization;
it hides significant issue or use other improper means to entice the client to send out transaction order;
it provides false bargain return to the client;
it doesn’t send the client’s transaction order to the futures exchange;
it embezzles the client’s deposit;
it doesn’t open deposit account at futures deposit custodian bank according to regulations, or it fails to transfer the client’s deposit in accordance with regulations;
other fraudulent activities prescribed by the futures supervision and administration authority of the State Council.
If the futures company conducts any one of the activities in the preceding paragraph, the heads and other people who are directly responsible shall be warned and fined RMB10,000 to RMB100,000. In serious circumstances, the post qualification and the qualification for futures practitioners shall be suspended or cancelled.
If any unit or individual fabricate and disseminate false information about futures transactions and disrupt the futures trading market, they should be penalized according to provisions of the 1st and 2nd paragraphs of this article.
Article 72 If the futures company and other futures business institutions, non-futures-company clearing members, the custodian bank for futures deposit provide false application documents or adopt other fraudulent means to hide important fact for obtaining futures business license, the futures business license shall be cancelled and illegal gains shall be confiscated.
Article 73 Insiders of insider information about futures transaction or persons who illegally obtain insider information about futures transaction use the insider information in futures transaction, or divulge insider information to others to let them use the insider information in futures transaction before the disclosure of information having significant impact on the futures transaction price, the illegal gains shall be confiscated and a fine of one to five times of the illegal gains shall be imposed at the same time. If there are no illegal gains or the illegal gains don’t reach RMB100,000, a fine between RMB100,000 and RMB500,000 shall be imposed. If a unit engages in insider trading, the heads or others who are directly responsible shall be warned and a fine between RMB30,000 and RMB300,000 shall be imposed at the same time.
If any staff of the futures supervision and administration authority of the State Council, the futures exchanges or the regulatory institution for the safe custody of the futures deposit conduct insider trading, the penalty shall be severe.
Article 74 If any unit or individual engages in any of the following activities to manipulate the futures trading price, correction shall be ordered, and illegal gains shall be confiscated, and a fine of one to five times of the illegal gains shall be imposed at the same time. If there are no illegal gains or the illegal gains don’t reach RMB200,000, a fine between RMB200,000 and RMB1 million shall be imposed.
manipulating futures trading price individually or in cahoots by combined or consecutive sale and purchase contracts based on advantage in fund, position or information;
willfully colluding in carry out futures transaction according to the scheduled time, price and means to influence the futures trading price or the futures trading volume;
self-dealing to influence the futures trading price or the futures trading volume;
hoarding merchandize on hand to influence the futures market;
other activities for manipulating futures trading price prescribed by the futures supervision and administration authority of the State Council.
If a unit conducts any of the activities in the preceding paragraph, the heads or others who are directly responsible shall be warned and a fine between RMB10,000 and RMB100,000 shall be imposed at the same time.
Article 75 Delivery warehouses which have one of behaviors listed in the section 2, article 39 of the Regulation shall be instructed to conduct rectification and given warnings. The illegal earnings shall be confiscated and a fine of 1-5 times of the illegal earnings will be penalized; if there is no illegal earnings or the illegal earnings is less than RMB100,000, the fine will be between RMB100,000 and RMB500,000; when the circumstances are serious, the futures exchange shall be instructed to be suspended or its qualification of delivery warehouse be canceled. Directors in direct charge and other personnel with direct responsibilities shall be given warnings and fined a penalty between RMB10,000 and RMB100,000.
Article 76 State-owned or state-controlled enterprises, which violate the Regulation and relevant regulations of the stated-owned assets supervision and administration institution of the State Council and other relevant departments on enterprises’ entry into the futures market with stated-owned assets to conduct futures trading, or units and individuals, which illegally use credit funds or financial funds to conduct futures trading, shall be given warnings; the illegal earnings shall be confiscated and a fine of 1-5 times of the illegal earnings will be penalized; if there is no illegal earnings or the illegal earnings is less than RMB100,000, the fine will be between RMB100,000 and RMB500,000. Directors in direct charge and other personnel with direct responsibilities shall be given disciplinary punishment from degrading to dismission.
Article 77 Domestic units or individuals that violate regulations to do overseas futures trading shall be instructed to conduct rectification and given warnings. The illegal earnings shall be confiscated and a fine of 1-5 times of the illegal earnings will be penalized; if there is no illegal earnings or the illegal earnings is less than RMB200,000, the fine will be between RMB200,000 and RMB1,000,000; when the circumstances are serious, the overseas futures trading shall be suspended. Directors in direct charge and other personnel with direct responsibilities shall be given warnings and fined a penalty between RMB10,000 and RMB100,000.
Article 78 Any unit or individual, who illegally establishes a futures exchange, futures company and other futures operating institution, does futures trading without authorization, or organizes futures trading activities in disguised form, shall be banned; the illegal earnings shall be confiscated and a fine of 1-5 times of the illegal earnings will be penalized; if there is no illegal earnings or the illegal earnings is less than RMB200,000, the fine will be between RMB200,000 and RMB1,000,000. Directors in direct charge and other personnel with direct responsibilities shall be given warnings and fined a penalty between RMB10,000 and RMB100,000.
Article 79 If futures companies refuse to cooperate with the futures supervision and administration institution of the State Council in investigating the trading and settlement software, or refuse to provide relevant software material to the institution according to regulations or there exist falsehood and serious omission in the software material, they shall be instructed to conduct rectification and fined a penalty between RMB30,000 and RMB100,000. Directors in direct charge and other personnel with direct responsibilities shall be given warnings and fined a penalty between RMB10,000 and RMB50,000.
Article 80 If intermediary service institutions including accounting firms, law firms and assets appraisal institutions fail to conducted due diligence and issue documents with false records, misleading statement or serious omission, they shall be instructed to conduct rectification; the business income shall be confiscated and relevant business certificate shall be suspended or revoked, with a fine of 1-5 times of the business income penalized. Directors in direct charge and other personnel with direct responsibilities shall be given warnings and fined a penalty between RMB30,000 and RMB100,000.
Article 81 Any unit or individual violates the Regulation and when the circumstances are serious, the futures supervision and administration institution of the State Council shall declare that the individual, the unit or the direct responsible personnel is banned from entering into the futures market.
Article 82 If staff of relevant units including the futures supervision and administration institution of the State Council, the futures exchanges, the futures deposit safety deposit supervision institutions and the futures deposit depository banks leak state secrets or commercial secrets of members and customers, or commit illegalities for personal gains, neglect their duties, abuse their powers and accept bribes, they shall be given disciplinary sanction or disciplinary punishment according to laws.
Article 83 If anyone violates the Regulation and the violation constitutes a crime, the criminal responsibilities shall be pursued according to laws.
Article 84 The administrative punishment in the Regulation towards illegal acts is decided by the futures supervision and administration institution of the State Council; when the act involves in the legitimate authority of other relevant departments, the institution shall dispose of it jointly with other relevant departments; when the act belongs to the legitimate authority of other departments, the institution shall transfer it to other departments for disposal.
Chapter VIII Supplementary Provisions
Article 85 Definitions of the terms used in the Regulations:
(1) Futures contract refers to a standardized contract prepared uniformly by the futures exchange for delivering a certain quantity of target at a specified time and place in the future. According to the target under the contract, a futures contract may be a commodity futures contract or a financial futures contract. Targets of the commodity futures contracts include agriculture products, industrial products, energy, other commodities and relevant index products while targets of the financial futures contracts include financial products including securities, interest rate and exchange rate and relevant index products.
(2) Options contract refers to a standardized contract prepared uniformly by the futures exchange for entitling a buyer to purchase or sell a given target (including the futures contract) at a specified price during a specified period of time in the future.
(3) Margin refers to the funds deposited by a futures trader for settlement and performance guarantee.
(4) Settlement refers to capital liquidation and transfer in accordance with the profit and loss of the two parties of the transaction at the settlement price set by the futures exchange.
(5) Delivery refers to a process whereby the two parties of the transaction close out a mature open contract by transferring the ownership of the target specified in the contract or settling the price differential in cash at the set settlement price according to the rules and procedures of the futures exchange.
(6) Closing a position refers to an act of completing the future trading whereby a futures trader purchases or sells the contract with the same variety, quantity and delivery month but in the opposite trading direction in the existing contract.
(7) Position refers to the amount of open contracts held by a futures trader.
(8) Position limit refers to the maximum position held by a futures trader set by the futures exchange.
(9) Warehouse receipt refers to a standardized bill of lading issued by the delivery warehouse and recognized by the futures exchange.
(10) Limit up and limit down refers to a price limit for the transactions made within a trading day. A quotation that goes beyond the price limit will be deemed invalid and the transaction will not be concluded.
(11) Inside information refers to the non-public information that may have great influence on the trading price of the futures. It includes the policy worked out by the futures regulatory authority of the State Council and other relevant departments and possibly exerting great influence on the trading price of the futures, the decision made by the futures exchange and likely having significant impact on the trading price of the futures, the capital and transaction trends of the members and clients of the futures exchange and other important information defined by the futures regulatory authority of the State Council and having remarkable influence on the trading price of the futures.
(12) Insider refers to a person who is able to access or acquire the inside information due to his management, supervision or profession capacity or due to duty performance as an employee or professional consultant. Insiders include the management and other practitioners who are able to acquire the inside information due to their positions in the futures exchange, staff of the futures regulatory authority of the State Council and other relevant departments and other personnel defined by the futures regulatory authority of the State Council.
Article 86 The futures regulatory authority of the State Council may approve the establishment of special futures settlement institutions which will specialize in the settlement of the futures exchange and relevant duties and assume the corresponding legal responsibility.
Article 87 The futures regulatory authority of the State Council, together with the commerce administrative department and the foreign exchange administrative department of the State Council and other relevant departments, is responsible for formulating the administrative measures on establishing, purchasing or taking a stake in futures trading institutions in China by overseas institutions and setting up branches (including representative offices) in China by overseas futures trading institutions. Those measures shall be put in force upon approval by the State Council.
Article 88 The futures trading, taking place in the trading venues approved by the futures regulatory authority of the State Council other than the futures exchange, shall be carried out according to relevant provisions in the Regulations.
Article 89 The standardized contract trading made by institutions or markets in a centralized way without the approval by the futures regulatory authority of the State Council and adopting the following trading mechanisms or featured in one of the following characteristics of the trading mechanisms constitutes the futures trading in a disguised form.
providing performance guarantees for all buyers and sellers participating in the centralized trading;
implementing the “mark to market” settlement system and margin system, with the margin charging proportion lower than 20% of the target amount of the contract.
Institutions or markets which adopt the trading mechanisms or are featured in one of the characteristics of the trading mechanisms prescribed in the previous clause before the implementation of the Regulations shall make rectification within the time limit prescribed by the commence administrative department of the State Council.
Article 90 The Regulations are not applicable to other activities of commodities or financial products trading which do not fall under the scope of futures trading and are subject to supervision by relevant national authority.
Article 91 The Regulations shall take effect as of April 15, 2007, and the “Interim Regulations on Administration of Futures Trading” promulgated by the State Council on June 2, 1999 shall be abolished simultaneously.