Regulation on the Administration of Futures Trading

• Area of Law： Futures
• Level of Authority： Administrative Regulations
• Date issued：03-01-2017
• Effective Date：03-01-2017
• Status： Effective
• Issuing Authority： State Council

Regulation on the Administration of Futures Trading
(Promulgated by the Order No. 489 of the State Council of the People's Republic of China on March 6, 2007; revised for the first time in accordance with the Decision of the State Council on Amending the Regulation on the Administration of Futures Trading on November 24, 2012; revised for the second time as per the Decision of the State Council on Appealing and Amending Some Administrative Regulations on July 18, 2013; and revised for the third time pursuant to the Decision of the State Council on Amending Some Administrative Regulations on February 6, 2016; and revised for the fourth time in accordance with the Decision of the State Council to Amend and Repeal Certain Administrative Regulations on March 1, 2017)
Chapter I General Provisions
Article 1 This Regulation is formulated for the purposes of regulating futures trading, intensifying the supervision and administration over futures trading, maintaining the futures market order, preventing risks, protecting the legitimate rights and interests of all parties to futures trading as well as the public interests, and promoting the vigorous but stable development of the futures market.
Article 2 All entities and individuals engaging in futures trading and relevant activities shall comply with this Regulation.
For the purposes of this Regulation, “futures trading” means trading activities with futures contracts or option contracts as the subject matter of trading conducted in the manner of centralized public trading or any other manner approved by the futures regulatory authority of the State Council.
For the purposes of this Regulation, “futures contract” means a standard contract uniformly prepared by a futures trading place under which a certain quantity of the subject matter shall be delivered on a given futures date at a specified location. Futures contracts include commodity futures contracts, financial futures contracts and other futures contracts.
For the purposes of this Regulation, “option contract” means a standard contract uniformly prepared by a futures trading place under which the buyer is entitled to buy or sell the subject matter (including a futures contract) at a specific price on a given futures date.
Article 3 The principle of openness, fairness, impartiality and good faith shall be observed in the futures trading activities. It is prohibited to conduct violations such as fraud, inside transactions and manipulated futures trading prices.
Article 4 Futures trading shall be conducted in a futures trading place established in accordance with paragraph 1 of Article 6 of this Regulation or in any other futures trading place approved by the State Council or the futures regulatory authority of the State Council.
No futures trading may be conducted outside of the futures trading places prescribed in the preceding paragraph.
Article 5 The futures regulatory institution of the State Council shall supervise and administer the futures markets in a centralized manner.
The offices dispatched by the futures regulatory institution of the State Council shall perform their supervisory functions according to the relevant provisions of this Regulation and under the authorization of the futures regulatory institution of the State Council.
Chapter II Futures Exchange
Article 6 The establishment of a futures exchange shall be subject to the examination and approval of the futures regulatory institution of the State Council.
Without the approval of the State Council or the futures regulatory authority of the State Council, no entity or individual may establish any futures trading place or organize futures trading and relevant activities in any form.
Article 7 A futures exchange shall not take profit-making as its purpose. It shall conduct self-disciplinary management according to its Articles of association. It shall bear civil liabilities to the extent of all of its properties. Its person-in-charge shall be appointed and dismissed by the futures regulatory institution of the State Council.
The administrative measures for futures exchanges shall be formulated by the futures regulatory institution of the State Council.
Article 8 The members of a futures exchange shall be enterprises with legal person status or other economic organizations established and registered within the territory of the People's Republic of China.
A futures exchange may adopt a graded member clearing system. The members under the graded member clearing system comprise of clearing members and non-clearing members.
Article 9 Anyone who is under any of the circumstances as described in Article 146 of the Company Law of the People's Republic of China or under any of the following circumstances shall not assume the post of the person-in-charge or accountant of the futures exchange:
(1)Five years have not lapsed from the day when the person-in-charge of a futures exchange, stock exchange or securities register & clearing institution, or the director, supervisor or senior manager of a futures company or securities company, or any other person as prescribed by the futures regulatory institution, is removed from his post because of his violation of disciplines; or
(2) Five years have not lapsed from the day when a lawyer, certified public accountant, or professional of an investment consultation institution, financial consultancy institution, credit rating institution, asset appraisal institution or verification institution, is removed from post because of his violation of disciplines.
Article 10 A futures exchange shall, in pursuance of this Regulation and the provisions of the futures regulatory institution of the State Council, formulate and improve various rules and strengthen the control of risks of trading activities as well as the supervision and administration over its members and staff. It shall perform the following duties:
(1)To provide a trading place and relevant facilities and services;
(2)To design contracts and arrange the listing of contracts;
(3)To organize and supervise the transactions, clearing and delivery;
(4)To provide centralized performance guarantee for futures trading;
(5)To supervise and administer its members according to its Articles of association and trading rules; and
(6)Other duties as prescribed by the futures regulatory institution of the State Council.
No futures exchange may directly or indirectly participate in futures transactions. No futures exchange may, without passing the examination of the futures regulatory institution of the State Council and being approved by the State Council, make trust investments, stock investments, investments in non-self-use real property or engage in any other business irrelevant to its duties.
Article 11 A futures exchange shall, under the relevant provisions of the State, establish sound systems for the management of risks:
(1)The margin system;
(2)The mark-to-market system;
(3)The system of price limits;
(4)The system of position limits as well as reports of big position holders;
(5)The rules on the reserve for risks;
(6)Other risk management systems as prescribed by the futures regulatory institution of the State Council.
A futures exchange which adopts the graded member clearing system shall establish a sound system of security.
Article 12 At the occurrence of any abnormal circumstance in the futures market, the futures exchange shall, according to the power and procedures as prescribed in its Articles of association, decide to take the following urgent measures and shall immediately report it to the futures regulatory institution of the State Council:
(1)To uplift the margin;
(2)To adjust the price limits;
(3)To limit the maximum amount of futures held by its members or clients;
(4)To suspend the transactions;
(5)To take other urgent measures.
The term “abnormal circumstance” as mentioned in the preceding paragraph refers to the acts of manipulating the futures trading prices or the occurrence of emergencies due for any force majeure and other circumstances as prescribed by the futures regulatory institution of the State Council.
After the disappearance of an abnormal circumstance, the futures exchange shall timely cancel the urgent measures.
Article 13 To handle the following affairs, a futures exchange shall be subject to the approval of the futures regulatory institution of the State Council:
(1)The formulation of or modification to its Articles of association or trading rules;
(2)The listing, suspension, cancellation or resumption of any type of transaction;
(3)Other affairs as prescribed by the futures regulatory institution of the State Council.
To approve the listing of new transaction type in a futures exchange, the futures regulatory institution of the State Council shall consult the opinions of the relevant department of the State Council
Article 14 The revenues of a futures exchange shall be managed and used in accordance with the relevant provisions of the state, but shall first be utilized to ensure the operation and improvement of the futures exchange and the facilities thereof.
Chapter III Futures Companies
Article 15 A futures company refers to a financial institution which is established according to the Company Law of the People's Republic of China and this Regulation and which engages in the business of futures. The establishment of a futures company shall be registered with the company registration authority and be subject to the approval of the futures regulatory authority of the State Council.
Without approval of the futures regulatory institution of the State Council, no entity or individual may establish any futures company to engage in the business of futures, or do so in any disguised form.
Article 16 To apply for establishing a futures company, the applicant shall satisfy the requirements in the Company Law of the People's Republic of China and the following conditions:
(1)Its minimum registered capital shall be 30 million yuan;
(2)Its directors, supervisors and senior managers have met the conditions for assuming their posts and its employees have obtained the futures practicing qualifications;
(3)It has its Articles of association which conform to the laws and administrative regulations;
(4)Its main shareholders and actual controllers have a sustainable profit-making capacity and a good reputation, and none of them has any record of serious violation during the recent 3 years;
(5)It has a qualified business place and operation facilities;
(6)It has sound risk management and internal control systems;
(7)Other conditions as prescribed by the futures regulatory institution of the State Council.
The futures regulatory institution of the State Council may, according to the principle of prudent supervision and the degree of risks of various businesses, increase the minimum amount of the registered capital. The registered capital shall be actually paid-in capital. The shareholders shall make capital contributions in cash or in kind essential to the business operations of a futures company and the capital contributions in cash shall not be less than 85% of the total.
The futures regulatory institution of the State Council shall, within 6 months after it accepts an application for the establishment of a futures company, examine it according to the principle of prudent supervision, and make a decision of approval or disapproval.
Without approval of the futures regulatory institution of the State Council, no entity or individual may entrust any other person or accept any other person's entrustment to hold or manage the stock rights of any futures company.
Article 17 A futures company shall be subject to the licensing system. The futures regulatory institution of the State Council shall grant it a permit according to the business type such as commodity futures and financial futures. Besides the domestic futures brokerage, a futures company may apply for engaging in overseas futures brokerage, futures investment consultation and other futures businesses as prescribed by the futures regulatory institution of the State Council.
No futures company may engage in any activity which has nothing to do with the business of futures, unless it is otherwise provided for by any law, administrative regulation, or by the futures regulatory institution of the State Council.
No futures company may engage in any self-operation business of futures or do so in any disguised form.
No futures company may provide financing service to its shareholders, actual controllers or other affiliated parties, or provide guaranty to outsiders.
Article 18 For a futures company engaging in brokerage business, if it accepts the entrustment of any client and conducts, in its own name, any futures transaction for its client, the transaction results shall belong to the client.
Article 19 Where a futures company intends to handle the following affairs, it shall be subject to the approval of the futures regulatory institution of the State Council:
(1)The merger, split-up, suspension of business, dissolution or bankruptcy;
(2) The change of its business scope;
(3) The modification of registered capital and adjustment of equity structure;
(4)The addition of a shareholder holding 5% or more of equity or modification of the controlling shareholder; or
(5) Other affairs as prescribed by the futures regulatory institution of the State Council.
The affairs as mentioned in Items (3) and (6) of the preceding paragraph, the futures regulatory institution of the State Council shall, within 20 days after it accepts an application, make a decision of approval or disapproval. For other affairs as described in the preceding paragraph, the futures regulatory institution of the State Council shall, within 2 months after it accepts an application, make a decision of approval or disapproval.
Article 20 Where a futures company or any of its branches is under any of the circumstances as described in Article 70 of the Administrative License Law of the People's Republic of China or under any of the following circumstances, the futures regulatory institution of the State Council shall cancel its futures business permit:
(1)Its business license is cancelled by the company registration organ;
(2)Without any justifiable reason, it fails to start business operations after the lapse of 3 months as of its establishment or suspends its business operations for 3 consecutive months or longer;
(3)Its files a cancellation application on its own initiative; and
(4)Other circumstances as prescribed by the futures regulatory institution of the State Council.
Before a futures company cancels its futures business permit, it shall settle the relevant futures businesses and return the margin and other assets to its clients in pursuance of the law. Any branch of the futures company shall, prior to the cancellation of the business permit, terminate its business activities and shall properly settle the clients' assets.
Article 21 A futures company shall formulate sound business management rules and risk management rules and strictly implement them. It shall abide by the information disclosure rules, ensure the safe custody of the clients' margin, and under the provisions of the futures exchange, report to the futures exchange the name list of its big clients and the relevant transactions.
Article 22 Other futures trading institutions engaging in the futures investment consulting business shall comply with the provisions issued by the futures regulatory authority of the State Council.
Chapter IV Basic Rules on Futures Trading
Article 23 The parties conducting futures trading in a futures exchange shall be members of the futures exchange.
Overseas institutions meeting the prescribed conditions may engage in specific types of futures trading on futures exchanges. The specific measures shall be developed by the futures regulatory authority of the State Council.
Article 24 A futures company which accepts a client's entrustment to trade futures on his account shall provide the client in advance with a risk disclosure statement, and after the client has confirmed this with his signature, it shall sign a written contract with the client. No futures company may conduct futures trading without client's entrustment or without following the client's entrustment.
No futures company may make any promise of profits to its clients or agree on sharing profits or risks with its clients.
Article 25 The following entities and individuals shall not engage in futures trading. No futures company may accept their entrustment to trade futures on their account:
(1)The state organs and public institutions;
(2)The futures regulatory institution of the State Council, the futures exchanges, the institution monitoring the safe custody of futures margin, as well as the personnel of the associations of the futures industry;
(3) The persons prohibited to enter into the futures market;
(4)The entities and individuals offer documents certifying that they have opened an account; and
(5)Other entities and individuals not allowed to trade futures as prescribed by futures regulatory institution of the State Council.
Article 26 A client may give trading instructions to the futures company in writing, by telephone, through the internet or other methods as prescribed by the futures regulatory institution of the State Council. The client's trading instructions shall be clear and complete.
No futures company may induce any client to give trading instructions by concealing any important event or by any other improper means.
Article 27 A futures exchange shall timely announce the details concerning the futures contracts of the marketed varieties, including the trading volume, trading price, volume of positions held, the highest and lowest prices, opening and closing prices, and other real time market information which should be announced, and ensure that the information announced is truthful and accurate. No futures exchange may release any information on price forecasts.
Without permission of the futures exchange, no entity or individual may release the real time market information about futures trading.
Article 28 The margin system shall be strictly observed in the futures trading. The margin, which a futures company collects from its clients, shall not be lower than the rates as prescribed by the futures regulatory institution of the State Council, or by the stock exchange, and shall be separated from the futures company's own money and be deposited in a special account.
The margin, which a futures company collects from its clients, belongs to the clients. Such margin shall be strictly prohibited from being used for any other purpose except for the settlement among its members.
The margin, which a futures company collects from its clients, belongs to the clients. Such margin shall be strictly prohibited from being used for any other purpose except for the following transferable circumstances:
(1)To pay the money available at the request of the clients;
(2)To deposit the margin or pay commissions or taxes on the clients' account; and
(3)Other circumstances as prescribed by the futures regulatory institution of the State Council.
Article 29 A futures company shall open a separate account and set up a separate trading code for each of its clients and may not mix up the codes in its futures trading.
Article 30 For a futures company engaging in the futures brokerage business and other futures businesses, it shall strictly follow the principle of separation of business and separation of funds, and shall not mix them up.
Article 31 The clearing members of a futures exchange, futures company or non-futures company shall, in accordance with the provisions of the futures regulatory institution of the State Council and of the finance department, prepare, manage and use the risk reserve, shall not misappropriate it.
Article 32 The items of, rates and administrative measures for service fees shall be uniformly formulated and announced by the relevant administrative department of the State Council.
Article 33 The settlement of futures trading shall be uniformly organized by the futures exchange.
The futures exchange shall adopt the mark-to-market system. It shall timely inform its members of the trading results on the current day.
A futures company shall settle its transactions according to the settlement result of the futures exchange and shall timely inform the client of the settlement result in a form as agreed to between it and the client. The client shall timely consult and properly deal with his trading positions.
Article 34 If the margin of a member of a futures exchange is not sufficient, such member shall timely replenish the margin or close his positions on his own initiative. If the said member fails to do so within the time limit as prescribed by the futures exchange, the futures exchange shall forcibly close his futures contract, and the relevant expenses or losses so incurred shall be borne by the member.
If the margin of a client of a futures exchange is not sufficient, such client shall timely replenish the margin or close his positions on his own initiative. If the said member fails to do so within the time limit as prescribed by the futures exchange, the futures exchange shall forcibly close his futures contract, and the relevant expenses or losses so incurred shall be borne by the client.
Article 35 The delivery in futures trading shall be uniformly organized by the futures exchange.
The delivery warehouse shall be designated by a futures exchange. The futures exchange shall sign an agreement with the delivery warehouse to specify their respective rights and obligations. The delivery warehouse shall not:
(1) issue any false warehouse receipt;
(2) violate the business rules of the futures exchange by imposing restrictions on the goods to enter or leave the delivery warehouse;
(3) divulge any business secret relating to the futures trading;
(4) violate the relevant provisions of the state by participating in the futures trading; or
(5) conduct any other acts as prescribed by the futures regulatory institution of the State Council.
Article 36 Where any member breaches the contract in futures trading, the futures exchange shall first use the member's margin to bear the liability for breach contract. If the margin is not enough, the futures exchange shall use its risk reserve and its own funds to bear the liabilities on that member's account, and be entitled to claim repayment afterwards against the member in question.
Where a client breaches a contract in futures trading, the futures exchange shall first use the client's margin to bear the liability for breach of contract. If the margin is not enough, the futures exchange shall use its risk reserve and its own funds to bear the liabilities on that client's account, and be entitled to claim repayment afterwards against the client in question.
Article 37 A futures exchange which adopts a graded member clearing system shall collect a sum of security from each of its clearing members. It merely makes settlement with the clearing members, collect security money and supplemental security money, and bear the liabilities for breach of contract on the clearing members' account with the clearing security money, risk reserve and its own fund, and take other relevant measures. The clearing members shall make settlement with the non-clearing members, collect security money and supplemental security money, and bear the liabilities for breach of contract on the non-clearing members' account with the clearing security money, risk reserve and their own fund, and take other relevant measures.
Article 38 The clearing members of a futures exchange or futures company or non-futures company shall ensure the completeness and safety of the futures trading, settlement and delivery materials.
Article 39 No entity or individual may make up or spread any false information about futures trading, or manipulate the futures trading prices by malicious collusion, joint trading or by other means.
Article 40 No entity or individual may use any credit fund or treasury fund to conduct futures trading.
The qualifications of a banking financial institution to engage in the financing or guaranty business relating to futures trading shall be subject to the approval of the banking regulatory institution of the State Council.
Article 41 To conduct futures trading at home and abroad, the state-owned or state controlled enterprises shall follow the hedging principle and strictly abide by the relevant provisions of the state-owned asset supervision and administration institution of the State Council and other relevant departments on enterprises' entering the futures market with state-owned assets.
Article 42 The purchase, settlement, incomes and expenses of foreign exchange under the overseas futures shall conform to the relevant provisions of the state on the administration of foreign exchange.
The measures for domestic entities or individuals to conduct overseas futures trading shall be formulated by futures regulatory institution of the State Council jointly with the commerce administrative department, state-owned asset supervision and administration institution, banking regulatory institution, foreign exchange administrative department and other relevant departments of the State Council, and shall be implemented upon approval of the State Council.
Chapter V Associations of the Futures Industry
Article 43 An association of the futures industry shall be a self-disciplinary organization of the futures industry. It is a social organization with the legal person status.
The futures companies and other institutions specially engaging in futures business operations shall join an association of the futures industry and pay the membership fee.
Article 44 The organ of power of an association of the futures industry shall be the general assembly of its members.
The Articles of association of the association of the futures industry shall be worked out by the general assembly of members and shall be submitted to the futures regulatory institution of the State Council for archival purposes.
The association of futures industry shall set up a council. The members of the council shall be elected under the Articles of association.
Article 45 The association of the futures industry shall perform the following duties:
(1)To organize the members and educate them to abide by the laws, regulations and policies on futures;
(2)To work out industrial self-disciplinary rules which shall be followed by the members, to supervise and inspect the members' acts, and give a disciplinary sanction to any member who violates the Articles of association or self-disciplinary rules of the association;
(3)To be responsible for the recognition, management and revocation of the qualifications of the practitioners;
(4)To accept the clients' complaints relating to the futures business, and to mediate the disputes between the members and between the members and clients;
(5)To protect the legitimate rights and interests of the members, and to report to the futures regulatory institution of the State Council the suggestions and demands of the members;
(6)To organize the vocational training for the practitioners and carrying out vocational exchanges between its members;
(7)To organize its members to do research on the development and operation of the futures industry; and
(8)Other duties as prescribed in the Articles of association of the futures industry.
The activities of the association of the futures industry shall be subject to the guidance and supervision of the futures regulatory institution of the State Council.
Chapter VI Supervision and Administration
Article 46 The futures regulatory institution of the State Council shall exercise supervision and administration on the futures market. It shall perform the following duties:
(1)To formulate rules and regulations on the supervision and administration of the futures market and to exercise the power of examination and approval;
(2)To supervise and administer the listing of the varieties of futures, the trading, settlement, delivery and other relevant activities relating to the futures trading;
(3)To supervise and administer the futures business activities conducted by the futures exchanges, futures companies and other futures institutions, clearing members of non-futures companies, institution monitoring the safe custody of futures margin, custodian bank of the futures margin, delivery warehouses and other market participants;
(4)To formulate the qualification standards and administrative measures for the futures practitioners, and to exercise supervision;
(5)To supervise the publicity of information about supervision and inspection on futures trading;
(6)To guide and supervise the activities of associations of the futures industry;
(7)To punish any violation of law or administrative regarding the supervision and administration of futures market;
(8)To carry out international communication and cooperation activities relating to the supervision and administration of the futures market; and
(9)Other duties as prescribed by the laws and administrative regulations.
Article 47 The futures regulatory institution of the State Council may take the following measures when performing its duties:
(1)To conduct on-the-spot inspections on the futures exchanges, futures companies and other futures institutions, clearing members of non-futures companies, institution monitoring the safe custody of futures margin, custodian bank of the futures margin and delivery warehouses;
(2)To make investigation and collect evidence in a place where a suspected violation has occurred;
(3)To question the parties concerned or any entity or individual relating to a case under investigation and requiring the relevant entity or person to give explanations on the matters relating to a case under investigation;
(4)To consult and copy such materials as the register of property right relating to the case under investigation;
(5)To consult and copy the futures trading records, financial materials and other relevant documents and materials of the parties concerned and other entities and individuals relating to the case under investigation, and to seal up the documents and material that may be transferred, concealed or damaged;
(6)To consult the margin account and bank account of the relevant entities relating to the case under investigation;
(7) When investigating into any serious violation such as manipulation of the futures trading price or insider trading, it may, upon the approval of the person-in-charge of the futures trading regulatory institution of the State Council, restrict the futures trading of the parties concerned in a case under investigation, whereby the restriction term shall not exceed 15 trading days. Under any complicated circumstance, the term of restriction may be extended for another 30 trading days; and
(8)Other measures as prescribed by the laws and administrative regulations.
Article 48 The futures exchanges, futures companies, other futures institutions, as well as institution monitoring the safe custody of futures margin shall submit to the futures regulatory institution of the State Council their financial statements, operation materials and other relevant materials.
With regard to the annual reports submitted by the futures companies and by other futures institutions, the futures regulatory institution of the State Council shall designate special persons to examine them and work out examination reports. The examiners shall affix their signatures to the examination reports. Where any problem is found in the examination, the futures regulatory institution of the State Council shall take corresponding measures.
Where necessary, the futures regulatory institution of the State Council may require the clearing members of non-futures companies, delivery warehouses, as well as the shareholders, actual controllers or other affiliated parties of futures companies to submit relevant materials.
Article 49 The futures regulatory institution of the State Council performs its duties such as carrying out supervision and inspection or making an investigation, the entities and individuals under inspection or investigation shall cooperate with it, faithfully provide relevant documents and materials, shall not refuse to do so, hamper the inspection or investigation or conceal any relevant information. Other relevant departments and entities shall support and cooperate with it.
Article 50 The state shall set up a futures investor guarantee fund geared to the development of the futures market.
The concrete measures for the raising, management and use of the futures investment fund shall be formulated by the futures regulatory institution of the State Council jointly with the finance department of the State Council.
Article 51 The futures regulatory institution of the State Council shall establish a sound system for the monitoring of the safe custody of margins and set up an institution to monitor the safe custody of margins.
The clients and the futures exchange, futures companies and other futures institutions, clearing members of non-futures companies as well as the custodian banks of futures margins shall observe the provisions of the futures regulatory institution of the State Council on the monitoring of the safe custody of margins.
Article 52 The institution monitoring the safe custody of futures margins shall, in accordance with the relevant provisions, monitor the safety of the margins, check it everyday and immediately report to the futures regulatory institution of the State Council the problems it finds, if any. The futures regulatory institution of the State Council shall, in light of different circumstances, timely tackle such problems under the relevant provisions of this Regulation.
Article 53 The futures regulatory authority of the State Council shall adopt a qualification administration system for the directors, supervisors, and senior executives of futures exchanges and institutions monitoring the safe custody of futures margin.
Article 54 A futures regulatory institution of the State Council shall formulate rules on the sustainable business operation of futures companies, which shall contain such risk supervision indicators as the ratio between the net capital and the net assets, the ratio between the net capital and the business scale of domestic and overseas futures brokerage businesses, as well as the ratio between the current assets and the current liabilities of a futures company, and specify the requirements for the business operation conditions, risk management, internal control, custody of margins, and affiliated transactions of the futures company and its branches.
Article 55 Where a futures company or any of its branches does not conform to the sustainable business operation rules or where any business operation risk occurs in a futures company or in any of its branches, the futures regulatory institution of the State Council may take such supervisory measures as arranging for an interview with or giving a warning to or keeping a credit record of the futures company and its directors, supervisors and senior managers, or order the futures company to make a correction within a time limit and check the rectification result.
If the futures company fails to make a correction and if its act severely endangers the stable and sound operation of the futures company and impairs the legitimate rights and interests of its clients, or if it is under investigation of the futures regulatory institution of the State Council because it is suspected of committing any serious violation, the futures regulatory institution of the State Council may, in light of different circumstances, take the following measures:
(1)To limit or suspend some of its futures businesses;
(2)To stop the approval of any new business;
(3)To restrict the distribution of bonuses, to restrict the payment of remunerations or provision of welfares to the directors, supervisors and senior managers;
(4)To limit the transfer of properties or setting any other right to his properties;
(5)To order the futures company to change its directors, supervisors, senior managers or the persons-in-charge of the relevant business departments or to limit their rights;
(6)To restrict the allocation, transfer and utilization of the futures company's own fund or risk reserve; and
(7)To order the controlling shareholders to transfer their stock rights or to impose restrictions on the relevant shareholders' exercise of the shareholders' rights.
After the rectification, if the futures company conforms to the relevant laws, administrative regulations, as well as the requirements of the sustainable business operation rules, the futures regulatory institution of the State Council shall, within 3 days after the completion of a check, lift the relevant measures taken against the futures company.
If, after the rectification, the futures company still fails to satisfy the requirements of the sustainable business operation rules and if its normal business operation is severely affected, the futures regulatory institution of the State Council shall have the power to revoke the permit for some or all of its futures businesses, or close down its branches.
Article 56 If the illegal business operation or serious risk of any futures company grossly disturbs the order of the futures market or impairs the clients' interests, the futures regulatory institution of the State Council may take such supervisory measures as ordering it to stop its business for rectification or designating any other institution to manage or take it over. Upon approval of the futures regulatory institution of the State Council, the following measures may be taken against the directly liable directors, supervisors and senior managers, as well as other directly liable persons:
(1)To notify the exit administrative organ to prevent them from leaving China; and
(2)To request the judicial organ to prohibit him from moving, transferring his properties or disposing of his properties by any other means, or setting any other right to his properties.
Article 57 Where a shareholder of a futures company makes any fake capital contribution or spirits away the registered capital, the futures regulatory institution of the State Council shall order it to make a correction within a time limit and may order him to transfer the stock rights of the futures company it holds.
Before the shareholder as prescribed in the preceding paragraph herein corrects its violation and transfers the stock right of the futures company it holds according to the relevant requirements, the futures regulatory authority of the State Council may restrict the shareholders' rights thereof.
Article 58 At the occurrence of any abnormity in the futures market, the futures regulatory institution of the State Council may take necessary risk measures.
Article 59 The trading software and clearing software of a futures company shall satisfy the requirements for the prudent business operation and risk management of the futures company as well as the relevant requirements of the futures regulatory institution of the State Council for the monitoring of safe custody of margins. If the trading software or clearing software does not meet the relevant requirements, the futures regulatory institution of the State Council shall have the power to require the futures company to improve it or replace it with another one.
The futures regulatory institution of the State Council may require the supplier of the trading software or clearing software of the futures company to offer materials relevant to the software, the supplier shall be cooperative. The futures regulatory institution of the State Council has the obligation to keep confidential the pertinent materials provided by the supplier.
Article 60 Where a futures company is involved in a major lawsuit or arbitration, or where the stock rights of a futures company are frozen or used as a collateral, or where any other major event occurs, the futures company and its relevant shareholders and actual controllers shall, within 5 days after the occurrence of the event, submit a written report to the futures regulatory institution of the State Council.
Article 61 When an accounting firm, law firm, asset appraisal institution or any other intermediary service institution provides relevant services to futures companies and other market participants, it shall abide by the laws, administrative regulations and other relevant provisions of the state on futures and shall provide pertinent materials as required by the futures regulatory institution of the State Council.
Article 62 The futures regulatory institution of the State Council shall, jointly with other relevant departments, establish a mechanism of information sharing, coordination and cooperation in terms of supervision and administration.
The futures regulatory institution of the State Council may, jointly with the futures regulatory authorities of other countries or regions, establish a regulatory cooperative mechanism to exercise transnational supervision and administration.
Article 63 Any of the personnel of the futures regulatory institution of the State Council, or of a futures exchange, institution monitoring the safe custody of futures margin or custodian bank of futures margins shall be duteous, impartial and clean, and handle matters according to law, and shall not take advantage of his post to seek improper benefits or divulge any commercial secret of the party concerned he has access to during his performance of duties.
Chapter VII Legal Liabilities
Article 64 Where a futures exchange or a clearing member of a non-futures company commits any of the following acts, it shall be ordered to make a correction, be given a warning, and its illegal gains shall be confiscated:
(1)Admitting any member in violation the relevant provisions;
(2) Charging commissions in violation of the relevant provisions;
(3) Using or distributing its proceeds in violation of relevant provisions;
(4) Failing to publish the real-time information as stipulated, or releasing any information of price forecast;
(5) Failing to fulfill its obligation to report to the futures regulatory institution of the State Council as required;
(6)Failing to submit relevant documents or materials to the futures regulatory institution of the State Council as required;
(7)Failing to establish a sound system of margin;
(8)Failing to prepare, manage or use risk reserves as required;
(9)Violating the provisions of the futures regulatory institution of the State Council on the monitoring of safe custody of margin;
(10)Imposing restrictions on the total volume of goods to be delivered by its members;
(11)Employing persons unqualified for the futures business; or
(12) Other acts in violation of the provisions of the futures regulatory institution of the State Council.
Where a futures exchange commits any of the acts as specified in the preceding paragraph, the directly liable person-in-charge and other directly liable persons shall be given a disciplinary sanction and shall be fined not less than 10, 000 yuan but not more than 100, 000 yuan.
Any futures exchange which commits the act described in Item (2) of the first paragraph in this Article shall be ordered to refund the overcharged commissions.
Where an institution monitoring the safe custody of futures margin commits any of the acts as described in Items (5), (6), (9), (11) and (12) of the second paragraph of this Article, it shall be punished and given a sanction in accordance with the provisions in the first and second paragraphs. If a custodian bank of futures margin commits any of the acts as mentioned in Item (9) and (12) of the first paragraph of this Article, it shall be punished and given a sanction in accordance with the provisions of the first and second paragraphs.
Article 65 Where a futures exchange commits any of the following conduct, it shall be ordered to make correction and warned, its illegal income shall be confiscated, and a fine of one up to five times the amount of illegal income shall be imposed on it; or if it has no illegal income or its illegal income is less than 100,000 yuan, it shall be fined100,000 yuan up to 500,000 yuan; and if the circumstances are serious, it shall be ordered to cease business operation for rectification:
(1) Handling any of the affairs set out in Article 13 of this Regulation without approval.
(2) Allowing a member to conduct futures trading without a sufficient margin.
(3) Directly or indirectly participating in futures trading or, in violation of relevant provisions, engaging in any business irrelevant to its functions.
(4) Collecting margins in violation of relevant provisions or misappropriating margins.
(5) Forging, altering or failing to preserve as required the futures trading, settlement and delivery documents and data.
(6) Failing to establish or implement the mark-to-market clearing, price limit, position limit or reporting limit system.
(7) Rejecting or obstructing the supervisory inspection conducted by the futures regulatory authority of the State Council.
(8) Committing any other conduct in violation of the provisions of the futures regulatory authority of the State Council.
Where a fixtures exchange or any clearing member of a non-futures company commits any of the acts specified in the preceding paragraph, the directly liable person-in-charge and other directly liable person shall be given a disciplinary sanction and fined not less than 10,000 yuan but not more than 100,000 yuan.
Where a non-futures-company clearing member commits any of the conduct set out in item (2), (4), (5), (6), (7) and (8), paragraph 1 of this Article, the member shall be punished or be subject to a disciplinary action under paragraphs 1 and 2 of this Article.
Where an institution monitoring the safe custody of futures margin commits any of the acts as described in Items (3), (7) and(8) of the first paragraph of this Article, it shall be punished and given a sanction in accordance with the provisions in the first and second paragraphs
Article 66 Where a futures company commits any of the following acts, it shall be ordered to make a correction, be given a warning, have its illegal gains confiscated, and shall be fined not less than one time but not more than three times the illegal gains. If there are no illegal gains or if the amount of illegal gains is less than 100, 000 yuan, it shall be fined not less than 100, 000 yuan but not more than 300, 000 yuan. If the circumstance is serious, it shall be ordered to stop business for rectification or have its futures business permit revoked:
(1)Accepting the entrustment of any entity or individual who does meet the relevant conditions;
(2)Allowing any client to conduct futures trading when its margin is insufficient;
(3)Handling the matters as listed in Article 19 of this Regulation without approval;
(4)Carrying out any activities which have nothing to do with the futures business;
(5)Engaging in self-operation business of futures or doing so in any disguised form;
(6)Providing financing service to its shareholders, actual controllers or other affiliated parties, or providing guaranties to outsiders;
(7)Violating the provisions of the futures regulatory institution of the State Council on the monitoring of the safe custody of margins;
(8)Failing to perform the obligation to report to or submit the relevant documents and materials to the futures regulatory institution of the State Council under the relevant provisions;
(9)Using any trading software or clearing software which does not satisfy the requirements for the prudent business operation and risk management of the futures company or the relevant requirements of the futures regulatory institution of the State Council for the monitoring of safe custody of margins;
(10)Failing to prepare, manage or use risk reserves as required;
(11) Falsifying or altering futures trading, settlement and clearing materials, or failing to preserve such materials in accordance with the relevant provisions;
(12)Employing persons unqualified for the futures business;
(13)Counterfeiting, altering, renting, lending, buying or selling any futures business permit or business license;
(14)Conducting any dealings by mixing up the codes;
(15)Rejecting or obstructing the supervision or inspection by the futures regulatory institution of the State Council; or
(16)Other acts in violation of the provisions of the futures regulatory institution of the State Council.
Where a fixtures company commits any of the acts as specified in the preceding paragraph, the directly liable person-in-charge and other directly liable persons shall be given a disciplinary sanction and be fined not less than 10, 000 yuan but not more than 50, 000 yuan. If the circumstance is serious, the futures practitioners' qualifications shall be suspended or revoked.
Where a futures institution other than a futures company commits any of the acts as described in Items (8), (12), (13), (15) and (16) of the first paragraph, it shall be punished in accordance with the first and second paragraphs of this Article.
Where a shareholder, actual controller or any other affiliate of a futures company, without approval, entrusts others or accepts others' entrustment to hold or manage the stock rights of the futures company, or refuses to be cooperative during the inspection of the futures regulatory institution of the State Council, or refuses to perform the obligation to report or submit the relevant information and materials as required, or submits or provides any information or materials with any false record or misleading statement or serious omission, it shall be punished in accordance with the first and second paragraphs of this Article.
Article 67 Where a futures company commits any of the following acts cheating the clients, it shall be ordered to make a correction, be given a warning, have its illegal gains confiscated and be fined not less than one time but not more than 5 times the illegal gains. If there are no illegal gains or the amount of illegal gains is less than 100, 000 yuan, it shall be fined not less than 100, 000 yuan but not more than 500, 000 yuan. If the circumstance is serious, it shall be ordered to make a rectification or have its futures business permit revoked:
(1) Making a promise of profits to its clients or failing to provide the clients in advance with a risk disclosure statement as required;
(2)Agreeing to share profits or risks with its clients in the business of brokerage;
(3)Failing to accept the entrustment of any client or failing to conduct futures trading according to the entrustment of any client;
(4)Inducing any client to give trading instructions by concealing any important event or by other improper means;
(5)Providing any client with false return on dealings;
(6)Failing to transmit any client's trading instruction to the futures exchange;
(7)Diverting the clients' margin to other purposes;
(8)Failing to open a margin account in the custodian bank of futures margin or illegally transferring the clients' margin; or
(9)Other acts cheating the clients as prescribed by the futures regulatory institution of the State Council.
Where a futures company commits any of the acts as mentioned in the preceding paragraph, the directly liable person-in-charge and other directly liable persons shall be given a warning and fined not less than 10, 00 yuan but not more than 100, 000 yuan. If the circumstance is serious, the futures practitioners' qualifications shall be suspended or revoked.
Where an entity or individual who makes up or spread false information about futures trading, if it (he) disturbs the futures trading market, it (he) shall be punished in accordance with the first and second paragraphs of this Article.
Article 68 Where a futures company, or any other futures institution, or clearing member of a non-futures company, or custodian bank of the futures margin obtains a futures business permit by providing false application documents or by concealing any important fact by other means of cheating, its futures business permit shall be revoked and its illegal gains shall be confiscated.
Article 69 For an insider of the inside information about futures trading or person who illegally obtains the inside information about futures trading, prior to the publicity of the information which may considerably affect the futures trading price, if he conducts futures trading by taking advantage of the inside information, or if he divulges the inside information to any other person so that such person conducts futures trading by taking advantage of the inside information, the illegal gains shall be confiscated and he shall be concurrently fined not less than one time but not more than 5 times the illegal gains. If there are no illegal gains or if the amount of illegal gains is less than 100, 000 yuan, he shall be fined not less than 100, 000 yuan but not more than 500, 000 yuan. Where an entity conducts any inside transaction, the directly liable person-in-charge and other directly liable persons shall be given a warning and fined not less than 30, 000 yuan but not more than 300, 000 yuan.
Where any of the personnel of the futures regulatory institution of the State Council, or of a futures exchange, or of an institution monitoring the safe custody of futures margin conducts any inside transaction, he shall be given a heavier punishment.
Article 70 Where any entity or individual commits any of the following acts manipulating the futures trading prices, it shall be ordered to make a correction, have its (his) illegal gains confiscated, and be concurrently fined not less than one time but not more than five times the illegal gains. If there are no illegal gains or if the amount of the illegal gains is less than 200, 000 yuan, it (he) shall be fined not less than 200, 000 yuan but not more than 1 million yuan:
(1)Manipulating fixtures trading prices individually or in collusion by buying and selling futures contracts by jointly or successively taking advantage of funds or positions it holds or by taking its advantage in information;
(2)Deliberately colluding with another party to conduct futures transactions with each other at a time, at a price and in a method agreed upon in advance so as to influence the futures trading prices or the fixtures trading volume;
(3)Using oneself as the trading party, acting as the buyer and seller simultaneously so as to influence the futures trading prices or the futures trading volume;
(4)Hoarding goods in order to influence futures market prices; or
(5)Committing other acts manipulating fixtures trading prices as prescribed by the futures regulatory institution of the State Council.
Where an entity or individual commits any of the acts as specified in the preceding paragraph, the directly liable person-in-charge and other directly liable persons shall be given a disciplinary sanction and fined not less than 10,000 yuan but not more than 100,000 yuan.
Article 71 Any delivery warehouse that commits any of the acts stipulated in Paragraph 2, Article 39 of this Regulation shall be ordered to make a correction, be given a warning, have its illegal gains confiscated, and shall be fined concurrently not less than one time but not more than five times the illegal gains. If there are no illegal gains or the amount of the illegal gains is less than 100, 000 yuan, it shall be fined not less than 100,000 yuan but not more than 500,000 yuan. If the circumstance is serious, the futures exchange shall be ordered to suspend or cancel the qualification of the delivery warehouse. The directly liable person-in-charge and other directly liable persons shall be given a warning and fined not less than 10, 000 yuan but not more than 100, 000 yuan.
Article 72 Where a state-owned enterprise or state controlled enterprise conduct futures trading in violation of this Regulation or in violation of the relevant provisions of the futures regulatory institution of the State Council and other relevant departments regarding the enterprises' entering the futures market with the state-owned assets, or where an entity or individual conducts futures trading by illegally using any credit fund, treasury fund, it (he) shall be given a warning with its (his) illegal gains being confiscated, and it shall be fined concurrently not less than one time but not more than 5 times the illegal gains. If there are no illegal gains or the amount of the illegal gains is less than 100, 000 yuan, it (he) shall be fined not less than 100,000 yuan but not more than 500,000 yuan. The directly liable person-in-charge and other directly liable persons shall be given a disciplinary sanction such as demotion or even removal.
Article 73 Where a domestic entity or individual conducts overseas futures trading in violation of the relevant provisions, it (he) shall be ordered to make a correction, be given a warning, have its (his) illegal gains confiscated, and shall be concurrently fined not less than one time but not more than 5 times the illegal gains. If there are no illegal gains or if the amount of illegal gains is less than 200, 000 yuan, it (he) shall be fined not less than 200, 000 yuan but not more than 1 million yuan. If the circumstance is serious, it (he) shall suspend the overseas futures trading. The directly liable person-in-charge and other directly liable persons shall be given a warning and concurrently fined not less than 10, 000 yuan but not more than 100, 000 yuan.
Article 74 Where anyone illegally establishes a futures trading place or organizes futures trading activities in any other form, such establishment or activities shall be banned by the local people's government at or above the county level, any illegal income shall be confiscated, and a fine of one up to five times the amount of illegal income shall be imposed on the violator; or if there is no illegal income or the illegal income is less than 200,000 yuan, the violator shall be fined 200,000 yuan up to one million yuan. If the violator is an entity, its direct person in charge and other directly liable persons shall be warned and each fined 10,000 yuan up to 100,000 yuan.
Where anyone illegally establishes a futures company or any other futures trading institutions or engages in the futures business without approval, the establishment or engagement shall be banned, the illegal income shall be confiscated, and a fine of one up to five times the amount of illegal income shall be imposed on the violator; or if there is no illegal income or the illegal income is less than 200,000 yuan, the violator shall be fined 200,000 yuan up to one million yuan. If the violator is an entity, its direct person in charge and other directly liable persons shall be warned and fined 10,000 yuan up to 100,000 yuan.
Article 75 Where a futures company's supplier of trading software or clearing software refuses to cooperate with the futures regulatory institution of the State Council in an investigation, or fails to provide the futures regulatory institution of the State Council with the relevant software materials as required, or provides the futures regulatory institution of the State Council with software materials with false information or serious omission, it shall be ordered to make a correction and fined not less than 30, 000 yuan but not more than 100, 000 yuan. The directly liable person-in-charge and other directly liable persons shall be given a warning and concurrently fined not less than 10, 000 yuan but not more than 50, 000 yuan.
Article 76 Where an accounting firm, law firm, asset appraisal institution or any other intermediary service institution fails to be duteous, or issues documents with any false record, misleading statement or serious omission, it shall be ordered to make a correction, have its business income confiscated, have its relevant business license suspended or revoked, and be concurrently fined not less than one time but not more than 5 times the business income. The directly liable person-in-charge and other directly liable persons shall be given a warning and be concurrently fined not less than 30, 000 yuan but not more than 100, 000 yuan.
Article 77 Where an entity or individual violates this Regulation, if the circumstance is serious, the futures regulatory institution of the State Council shall announce that this individual, this entity or the directly liable persons of this entity are prohibited to enter the futures market.
Article 78 Where any of the personnel of the futures regulatory institution of the State Council, or of a futures exchange, or of an institution monitoring the safe custody of futures margin, or of a custodian bank of futures margin divulges any state secret or any client's business secret he has access to, or seeks private benefits, neglects his duties, abuses his power or accepts any bribe, he shall be given an administrative or disciplinary sanction.
Article 79 Anyone who violates this Regulation and constitutes any crime shall be subject to the criminal liabilities.
Article 80 The administrative punishments for violations prescribed in this Regulation, except as otherwise provided for in this Regulation, shall be decided by the futures regulatory authority of the State Council; if the statutory functions of other relevant departments are involved, the futures regulatory authority of the State Council shall, jointly with other relevant departments, handle such violations; and if the violations fall within the statutory functions of other relevant departments, the futures regulatory authority of the State Council shall transfer such cases to other relevant departments for handling.
Chapter VIII Supplementary Provisions
Article 81 Definitions of the following terms:
(1) “Commodity futures contract” means a futures contract with agricultural products, industrial products, energy and other commodities, and their relevant index products as the subject matter.
(2) “Financial futures contract” means a futures contract with negotiable securities, interest rate, exchange rate and other financial products, and their relevant index products as the subject matter.
(3) “Margin” means the funds paid or standard warehouse receipts, treasury bonds and other negotiable securities with stable values and high liquidity submitted by futures traders, which are used for settlement and performance guarantee purposes.
(4) “Settlement” means the clearing and transfer of funds for the trading results of both trading parties at the settlement price published by a futures exchange.
(5) “delivery” means the procedure by which, on the maturity of a futures contract, both trading parties settle the contract having not yet closed out on the maturity by transferring the ownership of goods stipulated in the futures contract in accordance with the rules and procedures of the futures exchange, or settle the difference in cash at a settlement price as prescribed.
(6) “closing position” means the activity by which a futures trader purchases or sells a futures contract containing the same variety, quantity and month of delivery as those of the fixtures contract he has held, but is opposite in the direction of trading, in order to close out futures trading.
(7) “volume of positions held” refers to the volume of open contracts held by a futures trader.
(8) “position limit” means the maximum volume of positions held by a futures trader as prescribed by the futures exchange.
(9) “Standard warehouse receipt” means a standard delivery document issued by a warehouse and recognized by a futures exchange.
(10) “price limits” means that the trading price of a futures contract may not be higher or lower than the stipulated range on a certain trading day, and a quoted price which outgoes that range shall be regarded as invalid and the transaction cannot be completed.
(11) “inside information” refers to the information which has not been made public and might produce a major influence on futures trading prices, including the policies formulated by the futures regulatory institution of the State Council and other related departments which might produce a major influence on futures trading prices, decisions made by a futures exchange which might generate a major influence on fixtures trading prices, details of the financial status and trading trends of members and clients of a futures exchange, and other important information which the futures regulator institution of the State Council deems to have a conspicuous impact on futures trading prices.
(12) “insiders who have access to inside information” refers to persons who, by virtue of their management position, supervisory role or profession, or who, through their duties as an employee or professional consultant, have access to or obtain inside information, including the senior managing personnel of a futures exchange, other employees who, by virtue of their posts, can obtain inside information, personnel of the futures regulatory institution of the State Council, personnel of other related departments, and other persons as prescribed by the futures regulatory institution of the State Council.
Article 82 The futures regulatory institution of the State Council may approve the establishment of a special settlement institution, which is specially responsible for the settlement of futures exchanges, performs other relevant duties and bears the corresponding legal liabilities.
Article 83 The administrative measures for overseas institutions' establishment, merger or taking shares of futures institutions within China, as well as for overseas futures institutions' establishment of branches (representative offices) within China shall be formulated by the futures regulatory institution of the State Council jointly with the commerce administrative department, foreign exchange administrative department and other relevant departments of the State Council and shall be implemented upon approval of the State Council.
Article 84 The futures trading conducted in a trading place approved by the futures regulatory institution of the State Council other than in a futures exchange shall be governed by this Regulation.
Article 85 Other trading activities of commodities or financial products which do not fall into the category of futures trading shall be subject to the supervision and administration of the relevant competent departments of the state and are not governed by this Regulation.
Article 86 This Regulation shall come into forces as of April 15, 2007. The Interim Regulation on the Administration of Futures Trading as promulgated by the State Council on June 2, 1999, shall be repealed simultaneously.