Futures and Derivatives Law of the People’s Republic of China

(Adopted at the 34th Meeting of the Standing Committee of the Thirteenth National People’s Congress on April 20, 2022)

Contents

Chapter I      General Provisions

Chapter II    Futures Trading and Derivatives Trading

Section 1      General Rules

Section 2      Futures Trading

Section 3      Derivatives Trading

Chapter III   Futures Settlement and Delivery

Chapter IV   Futures traders

Chapter V    Futures Business Institutions

Chapter VI   Futures Trading Venues

Chapter VII Futures Clearing Institutions

Chapter VIII    Futures Service Providers

Chapter IX   Futures Association

Chapter X    Supervision and Administration

Chapter XI   Cross-Border Trading and Regulatory Cooperation

Chapter XII Legal Liability

Chapter XIII       Supplementary Provision

Chapter I    General Provisions

Article 1    This Law is enacted in order to regulate futures trading and derivatives trading, protect the legitimate rights and interests of all parties, maintain market order and safeguard public interests, promote the futures market and the derivatives market, serving the national economy, forestall and mitigate financial risks, and safeguard national economic security.

Article 2    This Law is applicable to futures trading and derivatives trading as well as related activities within the territory of the People’s Republic of China.

Where futures trading, derivatives trading, or related activities outside the territory of the People’s Republic of China have disrupted the market order or impaired the legitimate rights and interests of the traders within the territory of the People’s Republic of China, such activities shall be handled and investigated for legal liability in accordance with the relevant provisions of this Law.

Article 3    For the purpose of this Law, “futures trading” refers to activities that trade futures contracts and standardized options contracts.

“Derivatives trading” refers to trading activities other than futures trading, that involve swap contracts, forward contracts, non-standardized options contracts, and any combination thereof.

“A futures contract” refers to a standardized contract uniformly formulated by a futures trading venue stipulating the delivery of a certain volume of the underlying asset at a specific time and place in the future.

 “An options contract” refers to a standardized or non-standardized contract stipulating that the buyer is entitled to buy or sell the specified underlying asset (including futures contracts) at a specific price at certain time in the future.

“A swap contract” refers to a financial contract stipulating the exchange of the specified underlying asset within a specific time period in the future.

 “A forward contract” refers to a financial contract, other than a futures contract, stipulating the delivery of a certain volume of the underlying asset at a specific time and place in the future.

Article 4    The state supports the sound development of the futures market with a view to performing its functions of price discovery, risk management, and asset allocation.

The state encourages the use of the futures market and the derivatives market for hedging and other risk management activities.

The state takes measures to promote the development of the agricultural futures market and derivatives market with a view to guiding the production and sales of domestic agricultural products.

For the purposes of this Law, “hedging” refers to futures and derivatives trading activities conducted by traders that are substantially in line with their assets and liabilities for the purpose of managing the risks arising from changes in the value of such assets and liabilities.

Article 5    Systems and mechanisms shall be established and improved for monitoring, controlling, mitigating, and dealing with risks in the futures market and the derivatives market with a view to limiting excessive speculation and forestalling systemic risks according to law.

Article 6    Futures and derivatives trading activities shall comply with laws, administrative regulations, and relevant regulations of the state, and shall follow the principles of transparency, fairness, and equitability. Fraud, market manipulation, and insider trading are prohibited.

Article 7    All parties in futures trading and derivatives trading enjoy equal legal status, and shall act under the principle of voluntariness, compensation, and good faith.

Article 8    The futures regulatory authority under the State Council shall exercise centralized and unified supervision and administration over the futures market nationwide according to law. Where the State Council provides other regulations on the supervision and administration of interest rate and currency futures, such other regulations shall apply.

The derivatives market is supervised and administered by the futures regulatory authority under the State Council or any other department authorized by the State Council in accordance with the division of duties and responsibilities.

Article 9    Futures and derivatives associations shall exercise self-regulation according to law.

Article 10  The national audit institutions shall conduct auditing and supervision over the futures business institutions, futures trading venues, futures clearing institutions, and the futures regulatory authority under the State Council according to law.

Chapter II   Futures Trading and Derivatives Trading

Section 1      General Rules

Article 11   Futures trading shall be conducted at futures exchanges established according to law or at other futures marketplaces as approved according to law by the futures regulatory authority under the State Council (hereinafter collectively referred to as “futures trading venues”), and shall be conducted in an open and centralized manner or in any other manner approved by the futures regulatory authority under the State Council.

It is prohibited to conduct futures trading outside futures trading venues.

Derivatives trading may be conducted by agreement or by such other means as is prescribed by the State Council.

Article 12   No entity or individual shall manipulate the futures market or the derivatives market.

It is prohibited to manipulate the futures market by any of the following means to affect, or in an attempt to affect the price or volume of futures trading:

(1)   carrying out combined or successive purchases or sales of contracts independently or in collusion with other persons by building up an advantage in terms of funds, position or information;

(2)   colluding with other persons to conduct futures trading at preconcerted time and price through a preconcerted method;

(3)   conducting futures trading between accounts actually controlled by the same person;

(4)   inducing traders to conduct futures trading by using false or uncertain material information;

(5)   placing and canceling orders frequently or in a large number without the intent of filling the order;

(6)   making public comments, forecasts, or investment recommendations on related futures trading or on the trading of the underlying asset while conducting a reverse trading or other related activity;

(7)   stocking up in the spot market for the purpose of affecting the futures market;

(8)   using improper means to evade the position limits in the delivery month or at a time close to the delivery month to build up an advantage in open position;

(9)   manipulating the futures market by taking advantage of the activities in other relevant markets; or

(10) using any other means to manipulate the futures market.

Article 13   No insider or any other person that unlawfully obtains inside information on futures trading or derivatives trading shall engage in, or explicitly or implicitly instruct others to engage in relevant futures trading or derivatives trading, or divulge the inside information before such information is publicized.

Article 14   For the purposes of this Law, “inside information” refers to the nonpublic information that may have a major impact on the price of futures trading or derivatives trading.

Inside information on futures trading includes:

(1)   policies being prepared or information or data not yet publicized by the futures regulatory authority under the State Council or other relevant departments, which may have a major effect on the price of futures trading;

(2)   decisions made by futures trading venues or futures clearing institutions which may have a major impact on the price of futures trading;

(3)   movement of funds or transactions of members or traders at futures trading venues;

(4)   information on major abnormal transactions in related market; and

(5)   other information which has a major impact on the price of futures trading as prescribed by the futures regulatory authority under the State Council.

Article 15   For the purposes of this Law, “an insider” refers to an entity or individual that has access to or can obtain inside information by virtue of its or his business dealing, or management or oversight role, or by taking advantage of his position, etc.

Insiders of futures trading include:

(1)   relevant personnel of futures business institutions, futures trading venues, futures clearing institutions, and futures service providers;

(2)   staff members of the futures regulatory authority under the State Council and other relevant departments; and

(3)   other entities and individuals who may obtain inside information as prescribed by the futures regulatory authority under the State Council.

Article 16   No entity or individual shall disrupt the futures market or the derivatives market by fabricating or disseminating false or misleading information.

These entities and individuals are prohibited from making false representation or providing misleading information in futures trading, derivatives trading, and the related activities: futures business institutions, futures trading venues, futures clearing institutions, futures service providers, and their practitioners; venues and institutions organizing or conducting derivatives trading, and their practitioners; and futures and derivatives industry associations, the futures regulatory authority under the State Council as well as other departments authorized by the State Council, and their staff members.

Media shall disseminate authentic and objective information on the futures market and the derivatives market, and shall not disseminate any misleading information. Media and their staff members engaged in reporting on the futures market or the derivatives market shall not engage in any futures trading, derivatives trading, or related activities that create a conflict of interest with their duties.

Section 2    Futures Trading

Article 17   The listing of futures contracts and standardized options contracts shall comply with the regulations of the futures regulatory authority under the State Council, and shall be reported for registration by the futures trading venue at futures regulatory authority under the State Council.

The suspension, resumption, and termination of the listing of futures contracts or standardized options contracts shall comply with the regulations of the futures regulatory authority under the State Council, which shall be decided by the futures trading venue and be filed for the record with the futures regulatory authority under the State Council.

Futures contracts and standardized options contracts shall be for products of economic value, not be prone to manipulation and be for products that are aligned with the public interests.

Article 18   Real-name account system shall be adopted for futures trading. A trader, for engaging in futures trading, shall open accounts under the trader’s real name with a lawful proof of identity.

No entity or individual shall, in violation of regulations, lend its or his futures account or borrow another’s account to conduct futures trading.

Article 19   Those who engage in futures trading at a futures trading venue shall be members of the futures trading venue or other eligible participants specified by the futures regulatory authority under the State Council.

Article 20   A trader who entrusts a futures business institution for futures trading may give trading orders in writing, by telephone, or through self-service terminals or the Internet. Trading orders shall be clear, specific, and complete.

Article 21   Program trading with trading orders automatically generated or placed by computer programs shall comply with the regulations of the futures regulatory authority under the State Council, which shall be reported to the relevant futures trading venue, and shall not compromise the safety systems of the futures trading venue or disrupt the normal course of trading.

Article 22   A system of margin accounts shall be adopted for futures trading, under which futures clearing institutions collect margin from clearing participants, and the latter collect margin from traders. Margin is used for settlement and performance guarantee.

Margin may be in the form of cash, or liquid marketable securities such as central government bonds, stocks, fund shares, and standard warehouse receipts, or other assets specified by the futures regulatory authority under the State Council. Assets such as marketable securities may be used as margin through pledge or other means according to law that can secure performance.

Futures clearing institutions and clearing participants shall collect margin in such manners and at such ratios as are specified by the futures regulatory authority under the State Council.

In trading a standardized options contract, the seller shall deposit a margin and the buyer shall pay the premium.

“Premium” as used in the preceding paragraph refers to the payment made by the buyer to purchase the standardized options contract.

Article 23   A position limits system shall be adopted for futures trading to forestall the risks arising from excessive concentration of positions.

A trader engaged in hedging or other risk management activities may apply for a waiver of the position limit.

The measures governing position limits and hedging shall be formulated by the futures regulatory authority under the State Council.

Article 24   A system of reporting and management of the actual control relationship shall be adopted for futures trading. A trader shall report the actual control relationship between accounts for the record with the relevant futures business trading institution or futures trading venue in accordance with the regulations of the futures regulatory authority under the State Council.

Article 25   The fees charged for futures trading shall be reasonable. The items to be charged, the rates, and the administrative measures therefor shall be publicized.

Article 26   The result of a transaction shall not be altered if it is conducted in accordance with the business rules formulated by the relevant futures trading venue according to law, except in the circumstances provided for in the second paragraph of Article 89 of this Law.

Article 27   The members and traders of a futures trading venue shall report material information such as their transactions, positions, and margin in accordance with the regulations of the futures regulatory authority under the State Council.

Article 28   No entity or individual shall, in violation of relevant regulations, use credit or fiscal funds to conduct futures trading.

Article 29   Futures business institutions, futures trading venues, futures clearing institutions, futures service providers, and other entities, as well as their practitioners shall report in time any prohibited trading activities they have discovered to the futures regulatory authority under the State Council.

Section 3      Derivatives Trading

Article 30   Subject to the approval of the departments authorized by the State Council or of the futures regulatory authority under the State Council, a lawfully established venue may organize derivatives trading.

The trading rules formulated by a venue for derivatives trading shall be impartial in the protection of the legitimate rights and interests of all participants, and forestall market risks. Such rules shall be submitted to the departments authorized by the State Council or to the futures regulatory authority under the State Council for approval.

Article 31   Financial institutions shall duly obtain the corresponding approval or ratification for engaging in derivatives trading, and shall fulfill the obligations of trader suitability management and comply with relevant regulatory rules of the state.

Article 32   Where derivatives trading is conducted on the basis of a master agreement, the master agreement and all the supplementary agreements thereunder as well as the agreements between the parties regarding each specific transaction shall constitute a complete, single, and legally binding agreement between the parties.

Article 33   The models of the master agreement and other agreements specified in Article 32 of this Law shall be reported and filed for the record in accordance with the regulations of the departments authorized by the State Council or those of the futures regulatory authority under the State Council.

Article 34   Performance guarantee in derivatives trading may be provided through pledge or other means according to law.

Article 35   With respect to a derivatives trading lawfully conducted on the basis of a master agreement, where any event specified in the agreement occurs, the transaction may be terminated in accordance with the agreement and all trading profits and losses under the agreement shall be settled on a net basis.

Net settlement under the preceding paragraph shall not be suspended, invalidated, or revoked for reason of one party to the transaction entering into bankruptcy proceedings according to law.

Article 36   The departments authorized by the State Council and the futures regulatory authority under the State Council shall establish a repository for derivatives trading, which centrally gathers, preserves, analyzes, and manages derivatives trading information such as the underlying asset, trading volume, and counterparties, and shall disclose relevant information to the market in a timely manner according to relevant regulations. The specific measures to this end shall be formulated by the departments authorized by the State Council and the futures regulatory authority under the State Council.

Article 37   Close-out net settlement may be conducted according to law for any derivatives trading centrally cleared by a central counterparty which is a clearing institution approved by the relevant departments authorized by the State Council or by the futures regulatory authority under the State Council. The settlement assets shall be preferentially used for settlement and delivery, and shall not be sealed, frozen, seized, or be subjected to compulsory enforcement. Such assets shall not be appropriated by anyone before settlement and delivery are completed.

Central clearing conducted according to law shall not be suspended, invalidated, or revoked for reason of one party involved in the settlement process entering into bankruptcy proceedings according to law.

Article 38   The specific measures for regulating and supervising derivatives trading and related activities shall be formulated by the State Council in accordance with the principles in this Law.

Chapter III Futures Settlement and Delivery

Article 39   A mark-to-market system shall be adopted in futures trading. Within the time specified by a futures trading venue, a futures clearing institution shall settle with the clearing participants on the same day at the settlement price, and the clearing participants shall settle with traders based on the settlement results provided by the futures clearing institution. The settlement results shall be communicated to the clearing participants and the traders on the same day in a timely manner.

Article 40   The margin, premium, etc. collected by a futures clearing institution and the clearing participants shall be separated from their own funds, and shall be deposited in the dedicated accounts at futures margin depository institutions and be managed separately in accordance with the regulations of the futures regulatory authority under the State Council. Such funds shall not be diverted for other use in violation of regulations.

Article 41   Where the margin of a clearing participant fails to meet the required level set forth in the business rules of a futures clearing institution, the futures clearing institution shall, in accordance with its business rules, notify the clearing participant to deposit additional margin or to close out his positions within a specified time limit. In the case that the clearing participant fails to deposit additional margin or close out his positions within the specified time limit, the futures clearing institution shall notify the relevant futures trading venue to execute forced liquidation.

Where the margin of a trader fails to meet the level agreed upon between a clearing participant and the trader, the clearing participant shall, in accordance with the terms agreed, notify the trader to deposit additional margin or to close out his positions within the agreed time limit. In the case that the trader fails to deposit additional margin or close out his positions within the specified time limit, the futures trading venue shall execute forced liquidation as is agreed upon.

Where marketable securities or any other assets have been posted as margin, a futures clearing institution or a clearing participant may dispose of such securities or assets when executing forced liquidation in accordance with the two preceding paragraphs.

Article 42   Where a clearing participant defaults during the settlement process, the relevant futures clearing institution may use the clearing participant’s margin and clearing guarantee fund, as well as the futures clearing institution’s risk reserve and its own fund to complete the settlement in accordance with its business rules. A futures clearing institution that completes settlement with its risk reserve or its own fund may seek recourse against the clearing participant according to law.

Where a trader defaults during the settlement process, the carrying clearing participant may use the trader’s margin as well as the clearing participant’s risk reserve and its own fund to complete the settlement in accordance with the contract between them. A clearing participant that uses its risk reserve or its own fund to complete the settlement may seek recourse against the trader according to law. For the purposes of this Law, “clearing guarantee fund” refers to the contributions made by a clearing participant using its own fund to a futures clearing institution as a performance guarantee.

Article 43   The margin, premium, clearing guarantee fund, risk reserve, and other assets collected and drawn by a futures clearing institution in accordance with its business rules shall be preferentially used for settlement and delivery, and shall not be sealed, frozen, seized, or be subjected to compulsory enforcement.

Before settlement and delivery are completed, no one may appropriate the margin used as performance and delivery guarantee or the deliverables that have entered the delivery stage.

Settlement and delivery conducted according to law shall not be suspended, invalidated, or revoked for reason of one party in the settlement process entering into bankruptcy proceedings according to law.

Article 44   Upon the expiration of a futures contract, the trader shall settle the open futures contract through physical delivery or cash settlement.

At the time stipulated in a standardized options contract, the buyer of the contract has the right to buy or sell the underlying asset at the agreed price, or to complete a cash settlement as agreed. The seller of the contract shall perform the corresponding obligations as agreed. The exercise of standardized options contracts shall be organized by the relevant futures clearing institution.

Article 45   In the case of a physically delivered futures contract, the futures clearing institution shall be responsible for organizing the delivery of payment and certificates of title to the underlying asset of the contract such as standard warehouse receipts.

In the case of a cash-settled futures contract, the futures clearing institution shall transfer the profits and losses to both parties in the position which are calculated based on the delivery and settlement price.

For the purposes of this Law, “a standard warehouse receipt” refers to the standard delivery certificate issued by a delivery facility and registered with a futures trading venue.

Article 46   Physical delivery in futures trading shall be conducted at a delivery facility or delivery port designated by the relevant futures trading venue, or at any other place that meets the requirements of the venue. There shall be no limit of total delivery volume set for physical delivery. Where physical delivery is conducted through certificates other than standard warehouse receipts or by other means, the futures trading venue shall specify the rights and obligations of all parties participating in the delivery process.

Article 47   Where a clearing participant defaults during the delivery process, the relevant futures clearing institution shall have the right to dispose of the clearing participant’s standard warehouse receipts and other certificates of title to the underlying asset of the contract.

Where a trader defaults during the delivery process, the relevant clearing participant shall have the right to dispose of the trader’s standard warehouse receipts and other certificates of title to the underlying asset of the contract.

Article 48   A futures business institution not qualified as a clearing participant may entrust a clearing participant to conduct settlement for its customers on its behalf. The provisions of this Chapter on the rights and obligations between clearing participants and traders shall apply mutatis mutandis to the rights and obligations between the futures business institutions not qualified as clearing participants and the clearing participants as well as the traders.

Chapter IV Futures Traders

Article 49   “A futures trader” refers to a natural person, a legal person or an unincorporated organization that engages in futures trading in accordance with this Law and bears the results of the transaction.

Unless otherwise provided by the futures regulatory authority under the State Council, a futures trader shall engage a futures business institution to conduct futures trading on the trader’s behalf.

Article 50   Before providing services to a trader, a futures business institution shall duly acquire a full understanding of the trader and the relevant information such as the trader’s financial status, financial assets, trading knowledge and experiences, as well as professional competency; and the futures business institution shall truthfully state the key aspects of the services it provides and fully disclose trading risks. It shall provide services compatible with the trader’s profile.

Before engaging in futures trading and accepting services offered by a futures business institution, a trader shall truthfully provide the information set out in the preceding paragraph, as explicitly instructed by the futures business institution. Where a trader refuses to provide the aforementioned information or fails to provide information as being instructed, the futures business institution shall inform the trader of the consequences and, according to regulations, shall not offer services to the trader.

A futures business institution that violates the provisions of the first paragraph of this Article and thus causes losses to the traders shall bear the corresponding compensatory liability.

Article 51   Traders may be classified into ordinary traders and professional traders on the basis of factors such as their financial status, financial assets, trading knowledge and experiences, as well as professional competency. The criteria for professional traders shall be specified by the futures regulatory authority under the State Council.

Where an ordinary trader has a dispute with a futures business institution, the futures business institution shall prove that it has acted in compliance with laws, administrative regulations, and the regulations of the futures regulatory authority under the State Council, and has in no circumstances misled or cheated the trader. Where the futures business institution is unable to prove the above, it shall bear the corresponding compensatory liability.

Article 52   Legal persons and unincorporated organizations engaged in futures trading shall establish internal control and risk management systems that are commensurate with the contract type, scale, and purpose of their transactions.

Article 53   These persons are prohibited from engaging in futures trading: practitioners of futures business institutions, futures trading venues, and futures clearing institutions; staff members of the futures regulatory authority under the State Council and the futures association; and other individuals who are prohibited by laws, administrative regulations, and the regulations of the futures regulatory authority under the State Council.

Article 54   Traders have the right to inquire their instruction records, trading records, margin balance, and other important information relating to the services they receive.

Article 55   Futures business institutions, futures trading venues, futures clearing institutions, and futures service providers, as well as their staff members shall duly keep confidential the information of traders and shall not trade, provide, or divulge such information illegally.

Futures business institutions, futures trading venues, futures clearing institutions, and futures service providers, as well as their staff members shall not divulge any commercial secrets that have come to their knowledge.

Article 56   Where a dispute arises between a trader and a futures business institution, both parties may apply to the industry association or other organizations for mediation. In the case of a dispute between an ordinary trader and a futures business institution over futures-related matters, if the trader requests for mediation, the futures business trading institution shall not refuse such a request.

Article 57   Where traders file lawsuits for futures-related civil compensation on the ground of market manipulation or insider trading, if the subject matter of these lawsuits are of the same type and the number of litigants of one party is large, a representative may be elected according to law to participate in the litigation.

Article 58   The state shall establish a futures trader protection fund. The specific measures for the collection, administration, and use of the futures trader protection fund shall be formulated by the futures regulatory authority under the State Council in collaboration with the department of finance under the State Council.

Chapter V    Futures Business Institutions

Article 59  “A futures business institution” refers to either a futures company established in accordance with the Company Law of the People’s Republic of China and this Law, or any other institution ratified to engage in futures business by the futures regulatory authority under the State Council.

Article 60     The establishment of a futures company shall meet the following requirements and be subject to the ratification of the futures regulatory authority under the State Council:

(1)   having its articles of association in compliance with the provisions of laws and administrative regulations;

(2)   the major shareholders and the actual controller of the company having good financial position and credit records, having a net asset not below the level prescribed by the futures regulatory authority under the State Council, and having no record of major violation of laws or regulations in the last 3 years;

(3)   having a registered capital of not less than RMB 100 million yuan which is paid-in monetary capital;

(4)   the employees engaged in futures business meeting the requirements provided for in this Law, and the directors, supervisors, and members of senior management meeting the qualifications for assuming such positions;

(5)   having a sound corporate governance structure as well as sound risk management and internal control systems;

(6) having qualified business venues, facilities, and information technology systems; and

(7)   meeting other requirements provided by laws and administrative regulations, and the conditions prescribed by the futures regulatory authority under the State Council.

The futures regulatory authority under the State Council may raise the minimum registered capital in accordance with the principle of prudent regulation and in light of the risk ratings of different businesses.

The futures regulatory authority under the State Council shall, within 6 months as of the date of accepting an application for establishing a futures company, conduct examination in accordance with statutory requirements and procedures and in the principle of prudent regulation, make a decision to either ratify or deny the application, and inform the applicant of the decision. In the case that the application is denied, the reasons shall be given.

Article 61   A futures company shall include the word “futures” in its name, except otherwise provided for by the futures regulatory authority under the State Council.

Article 62   The following matters of a futures company are subject to ratification by the futures regulatory authority under the State Council:

(1)   merger, split, suspension from business, dissolution, and application for bankruptcy;

(2)   change of a major shareholder or the actual controller;

(3)   change in the registered capital and concurrent change in the shareholding structure;

(4)   change in business scope; and

(5)   other major matters specified by the futures regulatory authority under the State Council.

For any of the matters under Subparagraph (3) or (5) of the preceding paragraph, the futures regulatory authority under the State Council shall make a decision either to ratify or deny the application within 20 days as of the date of accepting the application; and for any of the other matters listed in the preceding paragraph, within 60 days.

Article 63   Upon ratification by the futures regulatory authority under the State Council, a futures company may engage in the following futures businesses:

(1)   futures brokerage;

(2)   futures trading consulting;

(3)   futures market making; and

(4)   other futures businesses.

A futures company engaged in asset management shall also comply with the Law of the People’s Republic of China on Securities Investment Funds as well as other applicable laws and administrative regulations.

Without ratification by the futures regulatory authority under the State Council, no entity or individual may establish any futures company plainly or in a disguised form, or engage in futures brokerage or futures trading consulting plainly or in a disguised form, or adopt any name containing “futures”, “options”, or any other potentially confusing or misleading word for the purposes of business operations.

Article 64   The directors, supervisors, and members of senior management of a futures company shall be honest and upright, have good morals, be familiar with the laws and administrative regulations on futures, and possess the necessary ability for business management as required by their duties. The appointment or removal of a director, supervisor, or any member of the senior management of a futures company shall be filed for the record with the futures regulatory authority under the State Council.

A person under any of the following circumstances shall not assume the position of director, supervisor, or member of senior management of a futures company:

(1)   where the person falls under any of the circumstances specified in the Company Law of the People’s Republic of China that prohibits him from assuming the position of director, supervisor, or member of senior management of a company;

(2)   where 5 years have not passed since the date when the person was removed from the position of director, supervisor, or member of senior management of a futures business institution, or from the office of the principal of a futures trading venue or a futures clearing institution, for a violation of law or discipline; or

(3)   where 5 years have not passed since the date when a certified public accountant, lawyer, or any other type of professional at a futures service institution had his license or qualification revoked for a violation of law or discipline.

Article 65   A futures business institution shall conduct business operation according to law, act with diligence and integrity. A futures business institution shall establish and improve the internal control systems and adopt effective measures of separation to prevent any conflict of interest between the institution and its customers and any conflict of interest between its customers.

A futures business institution shall separately handle futures brokerage business, futures market making business, asset management business, and other related businesses, and shall not mix those operations.

A futures business institution shall establish and implement an anti-money laundering system according to law.

Article 66   A futures business institution which is entrusted to conduct futures trading for a trader shall enter into a written brokerage contract with the trader, and conduct futures trading for the trader in the futures business institution’s name. The trader shall bear the result of such transactions.

No futures business institution which engages in futures brokerage business shall accept a trader’s authorization of full discretionary power in the futures brokerage business.

Article 67   A futures business institution which engages in asset management by investing with customers’ assets on their behalf shall treat the assets of different customers under its management fairly and shall not violate its fiduciary duty.

Article 68   A futures business institution shall not, in violation of the applicable regulations, provide financing or guarantee to its shareholders, actual controller, or the affiliates of its shareholders or actual controller, or provide external guarantees.

Article 69   The employees of a futures business institution who are engaged in futures business shall be honest and upright, have good morals, and possess the professional competency for futures business.

No employee of any futures business institution who is engaged in futures business shall conduct futures trading for a customer under a private arrangement.

Where, during the course of futures business activities, an employee of a futures business institution who engages in futures business violates the futures trading rules when implementing the instruction of the futures business trading institution or by taking advantage of his position, the futures business institution shall be fully liable for his violation.

Article 70   The futures regulatory authority under the State Council shall establish the rules of ongoing operation of futures business institutions to regulate business operation conditions, risk management, internal control, deposit of margin, compliance management, risk control indicators, related party transaction, and other relevant aspects of futures business institutions and their branches. Futures business institutions shall comply with the rules of ongoing operation.

Article 71   A futures business institution shall duly submit business, financial, and other operational and management information and materials to the futures regulatory authority under the State Council. The futures regulatory authority under the State Council has the authority to require a futures business institution as well as the major shareholders, actual controller, and other affiliates to provide the relevant information and materials within a specified time limit.

Information and materials submitted or provided by a futures business institution as well as the major shareholders, actual controller, and other associates to the futures regulatory authority under the State Council shall be truthful, accurate, and complete.

Article 72   A futures business institution that is involved in a major litigation or arbitration, or the equity of which is frozen or used for guarantee, or that is involved in any other material event, shall submit a written report thereon to the futures regulatory authority under the State Council within 5 days of the occurrence of such event.

The controlling shareholders or actual controller of a futures business institution shall cooperate with the futures business institution in performing the obligations set out in the preceding paragraph.

Article 73   Where a futures business institution fails to comply with the rules of ongoing operation or is exposed to any operational risk, the futures regulatory authority under the State Council shall order it to make rectifications within a time limit. Where a futures business institution fails to make rectification within the specified time limit, or its acts seriously jeopardize its own sound operation or harm the legitimate rights and interests of its traders, or it is under investigation by the futures regulatory authority under the State Council for a suspected violation of law or regulation, the futures regulatory authority under the State Council may take one or more of the following measures in light of different circumstances:

(1)   restricting or suspending certain lines of business;

(2)   halting the ratification of any new lines of business;

(3)   restricting the payment of dividends, remunerations, and benefits to its directors, supervisors, and members of senior management;

(4)   restricting the transfer of assets or the creation of other encumbrances on its assets;

(5)   ordering the replacement of directors, supervisors, or members of senior management, or the persons-in-charge of the relevant business departments or branches, or restricting the rights of these persons;

(6)   restricting the movement and use of its own funds or the risk reserve;

(7)   identifying the responsible directors, supervisors, or members of senior management as unfit for their positions; and

(8)   ordering the responsible shareholders to transfer their equity, or placing restrictions on the responsible shareholders’ exercise of their shareholders’ rights.

Where a futures business institution is in compliance with the laws, administrative regulations, and the rules of ongoing operation after making rectification, the futures regulatory authority under the State Council shall lift the relevant measures imposed thereupon within 3 days after concluding the inspection of the rectification.

Where a futures business institution fails to comply with the rules of ongoing operation after making rectification, which has seriously affected its operation, the futures regulatory authority under the State Council shall have the authority to revoke some or all of its futures business permits and order it to close down some or all of its branches.

Article 74   Where a futures business institution has operated illegally or is exposed to major risks, which seriously disrupts the futures market or harms the interests of the traders, the futures regulatory authority under the State Council may take regulatory measures against the futures business institution such as ordering it to suspend business for rectification, or designating another institution for trusteeship or taking over.

Subject to the approval of the futures regulatory authority under the State Council, the following measures may be taken against the directly responsible directors, supervisors, members of senior management, as well as other directly responsible persons of a futures business institution under any circumstance specified in the preceding paragraph:

(1)   deciding to prevent the said persons from leaving the country and notifying the Exit and Entry Administration to act as such according to law; and

(2)   applying to the judicial organ for prohibiting the said persons from moving, transferring or otherwise disposing their assets or from creating other encumbrances on such assets.

Article 75   Where a shareholder of a futures business institution makes fake capital contribution or illegally withdraws paid-in capital, the futures regulatory authority under the State Council shall order the shareholder to make rectification within a specified time limit, and may order the shareholder to transfer its equity in the futures business institution to others.

Before the aforementioned shareholder completes the rectification or transfers its equity as required under the preceding paragraph, the futures regulatory authority under the State Council may restrict its exercise of the shareholder’s rights.

Article 76   The futures regulatory authority under the State Council shall cancel the relevant permits of a futures business institution if the futures business institution falls under any of the circumstances:

(1)   where its business license is revoked according to law;

(2)   where it fails to commence operation without justification for more than 3 months after its establishment or, after commencing operation, ceases operation for more than 3 consecutive months without justification;

(3)   where it applies for cancellation of the said permits on its own initiative; or

(4)   where there is any other circumstance that requires the cancellation of administrative permits under the Administrative Permission Law of the People’s Republic of China or the regulations of the futures regulatory authority under the State Council.

A futures business institution shall settle the relevant futures businesses and duly return the margin and other assets of traders before the relevant permits are canceled.

Article 77   The futures regulatory authority under the State Council may, as it deems necessary, entrust a futures service provider to audit or assess the financial position, internal control, and asset value of a futures business institution. The specific measures to this end shall be formulated by the futures regulatory authority under the State Council in conjunction with other competent departments.

Article 78   A futures business institution is prohibited from conducting any of the following acts which harm the interests of traders:

(1)   promising no loss of principal or a minimum return;

(2)   agreeing to share profits and risks with the traders;

(3)   conducting futures trading in a manner that disregards traders’ instructions;

(4)   inducing traders to trade by concealment of important information or other improper means;

(5)   providing trading advice to traders based on false or uncertain material information;

(6)   providing false transaction reports to traders;

(7)   failing to submit trading orders to the relevant futures trading venue;

(8)   misappropriating traders’ margin;

(9)   failing to open margin accounts with futures margin depository institutions according to regulations, or transferring traders’ margin to other accounts in violation of regulations;

(10) obtaining improper interests or diverting risks to others under the guise of trader services; or

(11) committing any other act detrimental to the rights and interests of traders.

Chapter VI Futures Trading Venues

Article 79   Futures trading venues shall, following the principle of public interests first, provide venues and facilities for futures trading, organize and supervise futures trading, and maintain a fair, orderly, and transparent market; and shall implement self-regulation.

Article 80   The establishment, change, and dissolution of a futures exchange shall be subject to the approval of the futures regulatory authority under the State Council.

A futures exchange shall formulate its articles of association. The formulation and modification of the articles of association of a futures exchange shall be subject to the approval of the futures regulatory authority under the State Council.

Article 81   A futures exchange shall include the words of “commodity exchange” or “futures exchange” in its name. No other entity or individual may use a name containing the words of “futures exchange” or any other name that are confusing or misleading.

Article 82   A futures exchange may be organized as a member-owned exchange or an incorporated exchange.

The internal organizational structure of a member-owned futures exchange shall be set out in its articles of association.

Article 83  A futures exchange shall formulate its business rules in accordance with laws, administrative regulations, and the regulations of the futures regulatory authority under the State Council. The formulation and modification of trading rules shall be subject to the approval by the futures regulatory authority under the State Council.

The business rules of a futures exchange shall reflect the principle of equal protection for its members, traders, and other relevant parties in the market in term of their legitimate rights and interests.

Any person engaged in futures trading and related activities at a futures exchange shall comply with the business rules of the futures exchange according to law. Those who violate the business rules shall be subjected to disciplinary sanctions or other self-regulatory measures taken by the futures exchange.

Article 84   The principal of a futures exchange shall be nominated, appointed, and dismissed by the futures regulatory authority under the State Council.

No individual may serve as the principal of a futures exchange if he is unfit for the position of director, supervisor, or member of senior management under the Company Law of the People’s Republic of China or if he is under any of the following circumstances:

(1)   where 5 years have not passed since the date when the person was removed from the position of director, supervisor, or member of senior management of a futures business institution, or from the office of the principal of a futures trading venue or a futures clearing institution, for a violation of law or discipline; or

(2)   where 5 years have not passed since the date when a certified public accountant, lawyer, or any other type of professional at a futures service institution had his license or qualification revoked for a violation of law or discipline.

Article 85   A futures trading venue shall enhance risk control in trading activities as well as supervision and management of its members and staff in accordance with this Law and the regulations of the futures regulatory authority under the State Council, and shall perform the following duties according to law:

(1)   providing the venues, facilities, and services for trading;

(2)   designing futures contracts and standardized options contracts, and arranging the listing of futures contracts and standardized options contracts;

(3)   conducting real-time surveillance and risk monitoring over futures trading;

(4)   exercising self-regulation over members, traders, futures service providers, and the like in accordance with its articles of association and business rules;

(5)   carrying out trader education and market cultivation activities; and

(6)   performing other duties prescribed by the futures regulatory authority under the State Council.

Futures trading venues shall not directly or indirectly participate in futures trading. Without the approval of the State Council, no futures trading venue may engage in any business unrelated to its duties, such as investment in trust or in stocks, or in property that is not for their own use.

Article 86   The proceeds generated by a futures exchange shall be managed and used in accordance with the relevant regulations of the state and be primarily directed toward the operation and improvement of the venues and facilities for futures trading.

Article 87   Futures trading venues shall enhance risk monitoring in futures trading. In case of any abnormality, a futures trading venue may, according to its business rules, take one or more of the following emergency measures by itself or in collaboration with the relevant futures clearing institutions, and shall immediately report the situation to the futures regulatory authority under the State Council:

(1)   adjusting margin;

(2)   adjusting the range between the price limits for suspending futures trading;

(3)   adjusting the trading limits or position limits of its members and traders;

(4)   restricting the opening of positions;

(5)   carrying out forced liquidation;

(6)   imposing trading suspension; and

(7)   taking other emergency measures.

A futures trading venue shall lift the emergency measures in a timely manner once the abnormality is eliminated.

Article 88   Futures trading venues shall publish the real-time quotations from futures trading, and prepare and publish tabulated futures market data for each trading day.

A futures trading venue owns the rights and interests to its futures market data. Without the permission of the futures trading venue, no entity or individual may publish such data.

No futures trading venue may publish price predictions.

Futures trading venues shall perform the reporting obligation in accordance with the regulations of the futures regulatory authority under the State Council.

Article 89   Where the normal course of futures trading is affected by an emergency event, a futures trading venue, in order to maintain the normal order of futures trading and market integrity, may take necessary disposal measures in accordance with this Law and its business rules, and shall report the situation to the futures regulatory authority under the State Council in a timely manner.

Where an emergency event provided for in the preceding paragraph has led to a significant anomaly in the futures trading results, and settlement and delivery on the basis of such results would have a significant impact on the normal course of trading and market integrity, the futures trading venue may take measures such as canceling transactions in accordance with its business rules, and shall report the situation to the futures regulatory authority under the State Council and make an announcement in a timely manner.

Article 90   A futures trading venue shall not bear the civil liability for compensating any loss incurred due to any of the measures taken according to Articles 87 and 89 of this Law, unless it has acted with a major fault.

Chapter VII       Futures Clearing Institutions

Article 91  “A futures clearing institution” refers to a self-regulatory legal entity established according to law that provides settlement and delivery services for futures trading.

Futures clearing institutions include futures trading venues with internal clearing departments, independent futures clearing institutions, and securities clearing institutions approved by the futures regulatory authority under the State Council to engage in the settlement and delivery for security-related futures trading.

Article 92   The establishment, change, and dissolution of independent futures clearing institutions shall be subject to the approval of the futures regulatory authority under the State Council.

The following requirements shall be met for the establishment of an independent futures clearing institution:

(1)   having good financial position, with a minimum registered capital as required by the futures regulatory authority under the State Council;

(2)   having members of senior management with professional competency and business experiences required for their offices;

(3)   having a sound governance structure, as well as internal control and risk management systems;

(4)   having qualified business venues, information technology systems, and other facilities related to the settlement for futures trading; and

(5)   meeting other requirements prescribed by the futures regulatory authority under the State Council.

A futures trading venue with the functions of a futures clearing institution shall meet the criteria provided for in the second paragraph of this Article.

The futures regulatory authority under the State Council shall conduct examination in the principle of prudential regulation and make a decision of approval or disapproval within 6 months.

Article 93   A futures clearing institution in the capacity of a central counterparty, is the counterparty of all the clearing participants and shall conduct net settlement and provide centralized performance guarantee for futures trading.

Article 94   A futures clearing institution shall perform the following duties:

(1)   organizing settlement and delivery for futures trading;

(2)   exercising self-regulation over traders, futures business institutions, futures service providers, and non-futures business institution clearing participants in accordance with its articles of association and business rules;

(3)   handling information inquiry on settlement and delivery for futures trading; and

(4)   performing other duties prescribed by the futures regulatory authority under the State Council.

Article 95  A futures clearing institution shall, in accordance with the regulations of the futures regulatory authority under the State Council, include in its business rules matters such as the clearing participants system, risk management system, information security management system, measures for dealing with violations and breaches, as well as emergency response system and temporary disposal measures. The formulation and modification of the articles of association and business rules of a futures clearing institution shall be subject to the approval of the futures regulatory authority under the State Council. All who participate in the settlement for futures trading shall abide by the business rules of the relevant futures clearing institution.

A futures clearing institution shall formulate and implement its business rules in alignment and coordination with relevant rules of the futures trading venues.

Article 96   A futures clearing institution shall establish a liquidity management system to ensure the sound operation of settlement activities.

Article 97   The provisions of Article 84, the second paragraph of Article 85, Article 86, and the third and fourth paragraphs of Article 88 shall apply to independent futures clearing institutions and to the securities clearing institutions that are approved to engage in settlement and delivery for futures trading.

Chapter VIII     Futures Service Providers

Article 98     Futures service providers, such as accounting firms, law firms, asset valuation firms, futures margin depository institutions, delivery facilities, and information technology service providers shall be diligent and dutiful, provide services for futures trading and related activities in accordance with relevant business rules, and furnish relevant materials as required by the futures regulatory authority under the State Council.

Article 99     Any accounting firm, law firm, asset valuation firm, or other futures service provider, when issuing a document such as an audit report or legal opinion at the request of a futures business institution, futures trading venue, or futures clearing institution, shall check and verify the contents of the documentation and materials as to their authenticity, accuracy and completeness on which the document it issues is based.

Article 100   Delivery facilities include delivery warehouses and factory warehouses. A delivery facility shall provide futures trading-related delivery services that meet the requirements of the relevant futures trading venue. A futures trading venue shall enter into an agreement with a delivery facility stipulating the rights and obligations of the two parties.

No delivery facility shall:

(1)   issue false warehouse receipts;

(2)   limit the load-out or load-in of deliverables in violation of the business rules of the futures trading venue;

(3)   divulge any commercial secrets related to futures trading;

(4)   participate in futures trading in violation of the relevant regulations of the state; or

(5)   engage in any other act in violation of the regulations of the futures regulatory authority under the State Council.

Article 101   Information technology system service providers for futures trading and related activities shall meet relevant information security technical regulations and standards of the state and the futures industry, and shall file for the record with the futures regulatory authority under the State Council.

The futures regulatory authority under the State Council may require information technology service providers to furnish materials related to the information technology systems specified in the preceding paragraph in accordance with law.

Chapter IX Futures Association

Article 102   The futures association is a self-regulatory organization of the futures industry and a social-organization legal person.

Futures business institutions shall join the futures industry association. Futures service providers may join the association at their discretion.

Article 103   The members’ assembly is the authority of the futures association.

The articles of association of the futures association shall be formulated by the members’ assembly and be filed for the record with the futures regulatory authority under the State Council.

The futures association shall establish a Council whose members shall be elected in accordance with the articles of association.

Article 104   The futures association shall perform the following duties:

(1)   formulating and implementing the self-regulatory rules of the futures industry, supervising and inspecting the business activities of its members and the conducts of the practitioners, and imposing, according to regulation, disciplinary sanctions or other self-disciplinary measures on those who violate laws, administrative regulations, relevant regulations of the state, or the articles of association or self-regulatory rules of the futures association;

(2)   mediating disputes between its members or between its members and their traders;

(3)   safeguarding the legitimate rights and interests of its members, and submitting the suggestions and demands of its members to the futures regulatory authority under the State Council;

(4)   organizing professional training for the futures practitioners and business communications among its members;

(5)   educating its members and futures practitioners in compliance of futures laws, regulations, and policies; and organizing the integrity building within the industry and establishing relevant incentives and restraint mechanisms;

(6)   carrying out work concerning trader education and protection, supervising its members to implement trader suitability regime, and promoting the futures market;

(7)   carrying out self-regulation on the information security work of its members, urging its members to observe relevant information security technical regulations and standards of the state and the industry;

(8)   organizing its members to conduct research on the development, operation and related issues of the futures industry, collecting and publicizing information related to futures, providing member services, organizing industry exchanges, and guiding the innovations and development of the industry; and

(9)   performing other duties specified in its articles of association.

Chapter X   Supervision and Administration

Article 105   The futures regulatory authority under the State Council shall supervise and administer the futures market according to law with a view to maintaining transparency, fairness, and equitability of the futures market, forestalling systemic risks, safeguarding the legitimate rights and interests of traders, and promoting the sound development of the futures market.

The futures regulatory authority under the State Council shall perform the following duties according to law in the course of supervising and administering the futures market:

(1)   formulating regulations and rules on the supervision and administration of the futures market and handling, according to law, approval, ratification, registration, as well as filing for the record;

(2)   conducting supervision and administration of the listing, trading, settlement, and delivery of futures products and related activities;

(3)   conducting supervision and administration of the futures-related activities of futures business institutions, futures trading venues, futures clearing institutions, futures service providers, non-futures business institution clearing participants, and other market participants;

(4)   formulating the code of conduct for futures practitioners and supervising its implementation;

(5)   conducting supervision and inspection of information disclosure regarding futures trading;

(6)   safeguarding the legitimate rights and interests of traders, and organizing trader education;

(7)   investigating and punishing violations of futures laws;

(8)   monitoring, controlling, preventing, and handling the risks of the futures market;

(9)   conducting financial technology and information security supervision in the futures industry;

(10) providing guidance for and conducting supervision of the self-regulatory activities of the futures association; and

(11) other duties provided for in relevant laws and administrative regulations.

The futures regulatory authority under the State Council may, as it deems necessary, establish regional offices which shall perform supervisory and administrative duties as authorized.

Article 106   In performing its duties, the futures regulatory authority under the State Council has the authority to take the following measures:

(1)   carrying out on-site inspection on futures business institutions, futures trading venues, and futures clearing institutions; and requiring them to submit relevant financial and accounting materials, materials on its business activities and internal control;

(2)   entering the site where a suspected illegal act occurs to investigate and collect evidence;

(3)   inquiring the parties involved in a case under investigation and the related entities and individuals, and requiring them to give explanations on matters relating to the case under investigation, or requiring them to submit the documents and materials relating to the case under investigation in the specified manner;

(4)   inspecting and copying documents and materials relating to a case under investigation, such as property registration records and communication records;

(5)   inspecting and copying the futures trading records, financial and accounting materials, as well as other relevant documents and materials of the parties involved in a case under investigation, and those of the related entities and individuals; and sealing or seizing the documents and materials that are likely to be moved, concealed, or damaged;

(6)   inquiring the information on the margin accounts, bank accounts, as well as other accounts with payment, custody, or settlement function of the parties involved in a case under investigation and those of the related entities and individuals, and making copy of the relevant documents and materials; freezing or sealing the property or evidence, subject to the approval of the principal of the futures regulatory authority under the State Council or another responsible person authorized by the principal, when there is evidence proving that the illegal funds and other property involved in the case have been or may be transferred or concealed or that important evidence has been or may be concealed, forged, or damaged, for a period of 6 months. The freezing and sealing period may be extended under special circumstances, with each extension not exceeding 3 months and the total period not exceeding 2 years;

(7)   imposing trading restrictions on the parties involved in a case under investigation, subject to the approval of the principal of the futures regulatory authority under the State Council or another responsible person authorized by the principal, for a period not exceeding 3 months, and with an extension of another 3 months if the case is complicated; and

(8)   deciding to prevent the persons suspected of violating laws, and the persons in charge of the entities suspected of violating laws as well as other directly responsible persons of such entities from leaving the country and notifying the Exit and Entry Administration to act as such according to law.

In order to forestall futures market risks and maintain an orderly market, the futures regulatory authority under the State Council may take measures such as ordering rectification, holding regulatory talks, and imposing warnings.

Article 107   In an inspection or investigation conducted by the futures regulatory authority under the State Council to carry out its duties according to law, there shall be at least 2 persons conducting the inspection or investigation. These persons shall present their enforcement badges and relevant enforcement documents such as the notice of inspection, investigation, or inquiry. Where the number of persons conducting inspection or investigation is less than 2 or they fail to present their enforcement credentials or the relevant enforcement documents, the entity or individual under inspection or investigation has the right to refuse the inspection or investigation.

Article 108   The staff members of the futures regulatory authority under the State Council shall be devoted to their duties, act impartially and honestly according to law, and maintain the confidentiality of state secrets and the commercial secrets of the parties concerned, and shall not take advantage of their positions to seek improper interests.

Article 109   When the futures regulatory authority under the State Council performs its duties according to law, the entity or individual under inspection or investigation shall cooperate and provide the relevant documents and materials in a faithful manner, and shall not refuse or obstruct the inspection or investigation or conceal any fact.

The futures regulatory authority under the State Council shall, in collaboration with other relevant departments, establish an information sharing mechanism for supervision and administration. Where the futures regulatory authority under the State Council performs its duties of inspection and investigation according to law, the relevant departments shall cooperate.

Article 110   All entities or individuals have the right to report acts suspected of violating the futures laws and regulations to the futures regulatory authority under the State Council. 

The futures regulatory authority under the State Council shall duly reward an informer who reports in real name a clue to a suspected major violation of laws or regulations which is afterwards verified.

The futures regulatory authority under the State Council shall keep the identity of the informer confidential.

Article 111   The regulations, rules, and supervisory and administrative protocols established by the futures regulatory authority under the State Council shall be made public according to law.

Penalty decisions of the futures regulatory authority under the State Council against violations of the futures laws which are made based on the results of investigation shall be publicized.

Article 112   During an investigation carried out by the futures regulatory authority under the State Council on an entity or individual suspected of violating the futures laws, the futures regulatory authority under the State Council may decide to suspend the investigation if the party under investigation submits a written application to the futures regulatory authority under the State Council undertaking to rectify the alleged violations, compensate the relevant traders for their losses, and eliminate the harms or adverse effects within a time limit determined by the futures regulatory authority under the State Council. Where the party under investigation has performed its undertaking, the futures regulatory authority under the State Council may make a decision to terminate the investigation. Where the party under investigation fails in the performance of its undertaking or falls under any other circumstances specified by the State Council, the investigation shall be resumed. The specific measures to this end shall be formulated by the State Council.

Where the futures regulatory authority under the State Council decides to suspend or terminate an investigation, it shall duly publicize the relevant information.

Article 113   The futures regulatory authority under the State Council shall enter the relevant futures market entities’ compliance with this Law into the integrity archives of the futures market.

Article 114   Where the futures regulatory authority under the State Council, in performing its duties according to law, finds that a violation of futures laws may have constituted a crime, it shall transfer the case to the relevant judicial organ according to law. Where it finds that a functionary may have committed a crime or any other violation by taking advantage of his office, he shall be transferred to the relevant supervisory organ for handling according to law.

Article 115   The futures regulatory authority under the State Council shall establish and improve the futures market monitoring and surveillance system, and shall strengthen supervision and surveillance of the safe custody of margin through specialized agencies.

Article 116   To forestall trading and settlement risks, futures business institutions, futures trading venues, futures clearing institutions, and non-futures business institution clearing participants shall draw from their business income risk reserves, and manage and use the risk reserves according to the regulations of the futures regulatory authority under the State Council and the department of finance under the State Council.

Article 117   Futures business institutions, futures trading venues, futures clearing institutions, futures service providers, non-futures business institution clearing participants shall duly and properly preserve the information and materials relating to their business operation. No one shall divulge, conceal, forge, tamper with, or damage such information or materials. The information and materials of futures business institutions, futures trading venues, futures clearing institutions, and clearing participants of non-futures business institutions shall be preserved for not less than 20 years; those of futures service providers shall be preserved for not less than 10 years.

Chapter XI Cross-Border Trading and Regulatory Cooperation

Article 118   Unless otherwise provided by the futures regulatory authority under the State Council, any overseas futures trading venue that provides trading services to entities or individuals within the territory of the People’s Republic of China via direct access to its trading system shall apply for registration with the futures regulatory authority under the State Council and be subjected to its supervision and administration.

Article 119   In case of a futures contract, options contract, or derivatives contract listed on an overseas futures trading venue and linked to the prices of a contract listed on a domestic futures trading venue, the settlement shall comply with the regulations of the futures regulatory authority under the State Council.

Article 120   A domestic entity or individual that engages in futures trading in an overseas market shall entrust a domestic futures business institution qualified to offer overseas futures brokerage services to conduct futures trading for it or him, except otherwise provided for by the State Council.

Where a domestic futures business institution entrusts an overseas futures business institution to conduct futures trading in an overseas market, the overseas futures business institution shall apply for registration with the futures regulatory authority under the State Council and be subjected to its supervision and administration, except otherwise provided by the futures regulatory authority under the State Council.

Article 121   An overseas futures trading venue shall file for the record with the futures regulatory authority under the State Council for establishing a representative office within the territory of the People’s Republic of China.

The representative office of such overseas futures trading venue and its staff shall not engage in any revenue-generating activity either plainly or in a disguised form.

Article 122   Any marketing, promotion, or solicitation activity conducted within the territory of the People’s Republic of China by an overseas institution for a futures market shall be subject to the approval of the futures regulatory authority under the State Council and be governed by the relevant provisions of this Law.

Any marketing, promotion, or solicitation activity related to the futures market and conducted within the territory of the People’s Republic of China by a domestic institution on behalf of an overseas institution shall be subject to the approval of the futures regulatory authority under the State Council. No entity or individual may conduct any marketing, promotion, or solicitation activity for a futures market in violation of the provisions in preceding two paragraphs.

Article 123   The futures regulatory authority under the State Council may establish regulatory and supervisory cooperation mechanisms with the futures regulatory authorities of overseas markets and join international organizations, with a view to conducting cross-border supervision and administration.

When providing assistance to an overseas futures regulatory authority as per request, the futures regulatory authority under the State Council, shall do so in compliance with state laws and regulations and the principles of reciprocity and mutual benefit, and shall not divulge any state secrets or compromise any national or public interests.

Article 124   The futures regulatory authority under the State Council may accept the request of an overseas futures regulatory authority, and conduct investigation and collect evidence in accordance with the duties and procedures provided for in this Law and following the arrangement for regulatory cooperation between it and the overseas futures regulatory authority. The overseas futures regulatory authority shall provide the materials of the relevant case and state that it is investigating the parties concerned for a suspected violation of the futures laws and regulations of its home jurisdiction. No overseas futures regulatory authority may directly conduct investigation or collect evidence within the territory of the People’s Republic of China.

Without the consent of the futures regulatory authority under the State Council and the competent departments under the State Council, no entity or individual may provide documents or materials related to futures activities to an overseas regulatory authority.

The futures regulatory authority under the State Council may, in accordance with the arrangement for regulatory cooperation between it and an overseas futures regulatory authority, request the latter to assist in investigation and evidence collection.

Chapter XII       Legal Liability

Article 125   Whoever manipulates the futures market or the derivatives market in violation of Article 12 of this Law shall be ordered to make rectification, with the illegal gains confiscated and a fine of not less than one time but not more than ten times the amount of the illegal gains imposed. If there are no illegal gains or if the illegal gains are less than RMB 1 million yuan, a fine of not less than RMB 1 million yuan but not more than RMB 10 million yuan shall be imposed. Where an entity engages in market manipulation, the directly responsible persons in charge and other directly responsible persons shall be given a warning and be fined not less than RMB 500,000 yuan but not more than RMB 5 million yuan.

Whoever engages in market manipulation and thus causes losses to traders shall bear compensatory liability according to law.

Article 126   Whoever commits insider trading in violation of the provisions of Article 13 of this Law shall be ordered to make rectification, with the illegal gains confiscated and a fine of not less than one time but not more than ten times the amount of the illegal gains imposed. If there are no illegal gains or if the illegal gains are less than RMB 500,000 yuan, a fine of not less than RMB 500,000 yuan but not more than RMB 5 million yuan shall be imposed. Where an entity commits insider trading, the directly responsible persons in charge and other directly responsible persons shall be given a warning and be fined not less than RMB 200,000 yuan but not more than RMB 2 million yuan.

A staff member of the futures regulatory authority under the State Council or of a department authorized by the State Council, or a staff member of a futures trading venue or futures clearing institution commits insider trading shall be given a heavier punishment.

Whoever commits insider trading and thus causes losses to traders shall bear compensatory liability according to law.

Article 127   Whoever, in violation of the provisions of the first or third paragraph of Article 16 of this Law, disrupts the futures market or the derivatives market by fabricating or disseminating false or misleading information, the illegal gains shall be confiscated and a fine of not less than one time but not more than ten times the amount of the illegal gains shall be imposed. If there are no illegal gains or if the illegal gains are less than RMB 200,000 yuan, a fine of not less than RMB 200,000 yuan but not more than RMB 2 million yuan shall be imposed. The directly responsible persons in charge and other directly responsible persons shall be given a warning and be imposed a fine of not less than RMB 100,000 yuan but not more than RMB 1 million yuan.

Whoever, in violation of the provisions of the second paragraph of Article 16 of this Law, makes false statements or misleads others in futures trading or derivatives trading shall be ordered to make rectification and be fined not less than RMB 200,000 yuan but not more than RMB 2 million yuan. A state functionary committing an act as prescribed above shall, in addition, be given sanctions according to law.

Where a media entity or a staff member of media entity engaged in reporting on the futures market or the derivatives market, in violation of the provisions of the third paragraph of Article 16 of this Law, engages in futures trading or derivatives trading that are in conflict with its or his duties, the illegal gains shall be confiscated, and a fine of not more than one time the amount of the illegal gains shall be imposed. If there are no illegal gains or if the illegal gains are less than RMB 100,000 yuan, a fine of not more than RMB 100,000 yuan shall be imposed.

Whoever fabricates or disseminates false information on, or misleads others in futures trading or derivatives trading and thus causes losses to traders shall bear compensatory liability according to law.

Article 128   Whoever, in violation of the provisions of the second paragraph of Article 18 of this Law, lends its or his futures account or borrows that of others to conduct futures trading shall be ordered to make rectification and be given a warning, and may be fined not more than RMB 500,000 yuan.

Article 129   Whoever, in violation of the provisions of Article 21 of this Law, affects the safety systems of a futures trading venue or the normal course of trading through program trading shall be ordered to make rectification and be fined not less than RMB 500,000 yuan but not more than RMB 5 million yuan. The directly responsible persons in charge and other directly responsible persons shall be given a warning, and be fined not less than RMB 100,000 yuan but not more than RMB 1 million yuan.

Article 130   Whoever fails to report material information in violation of the provisions of Article 27 of this Law shall be ordered to make rectification and be given a warning, and may be fined not more than RMB 1 million yuan.

Article 131   A person prohibited by laws, administrative regulations, or the regulations of the futures regulatory authority under the State Council from engaging in futures trading, in violation of the provisions of Article 53 of this Law, engages in futures trading either directly or under a pseudonym or the name of another person shall be ordered to make rectification and be given a warning, with the illegal gains confiscated and a fine of not less than RMB 50,000 yuan but not more than RMB 500,000 yuan. Any state functionary committing an act as prescribed above shall, in addition, be given sanctions according to law.

Article 132  Where anyone illegally establishes a futures company or engages in unapproved futures-related business, the illegally established company or the unapproved business shall be banned, with the illegal gains confiscated and a fine of not less than one time but not more than ten times of the amount of the illegal gains. If there are no illegal gains or if the illegal gains are less than RMB 1 million yuan, a fine of not less than RMB 1 million yuan but not more than RMB 10 million yuan shall be imposed. The directly responsible persons in charge and other directly responsible persons shall be given a warning and be fined not less than RMB 200,000 yuan but not more than RMB 2 million yuan.

Article 133   Where an entity obtains the license for the establishment of a futures company, the approval for the alteration of a major matter, or the permit for a futures business by submitting fraudulent application materials or by any other means of fraud, the relevant license, approval or permit shall be revoked, with the illegal gains confiscated and a fine of not less than one time but not more than ten times the amount of the illegal gains imposed. If there are no illegal gains or if the illegal gains are less than RMB 200,000 yuan, a fine of not less than RMB 200,000 yuan but not more than RMB 2 million yuan shall be imposed. The directly responsible persons in charge and other directly responsible persons shall be given a warning and be fined not less than RMB 200,000 yuan but not more than RMB 2 million yuan.

Article 134   A futures business institution that violates the provisions of Article 40, 62, 65, 68, 71, or 72 of this Law shall be ordered to make rectification and be given a warning, with the illegal gains confiscated and a fine of not less than one time but not more than ten times the amount of the illegal gains imposed. If there are no illegal gains or if the illegal gains are less than RMB 200,000 yuan, a fine of not less than RMB 200,000 yuan but not more than RMB 2 million yuan shall be imposed. If the circumstances are serious, the futures business institution shall be ordered to suspend business operation for rectification or its permit for futures business shall be revoked. The directly responsible persons in charge and other directly responsible persons shall be given a warning and be fined not less than RMB 50,000 yuan but not more than RMB 500,000 yuan.

A futures business institution that commits any of the illegal acts in the preceding paragraph and thus causes losses to traders shall bear compensatory liability according to law.

A major shareholder, an actual controller, or any other affiliate of a futures business institution that violates the provisions of Article 71 of this Law shall be punished in accordance with the provisions of the first paragraph of this Article.

Article 135   A futures business institution that breaches the rules of trader suitability management provided in Article 50 of this Law, or violates the provisions of Article 66 of this Law to accept authorization of full discretionary power in brokerage services, or commits any act set out in Article 78 of this Law that harms traders’ interest, shall be ordered to make rectification and be given a warning, with the illegal gains confiscated and a fine of not less than one time but not more than ten times the amount of the illegal gains imposed. If there are no illegal gains or if the illegal gains are less than RMB 500,000 yuan, a fine of not less than RMB 500,000 yuan but not more than RMB 5 million yuan shall be imposed. If the circumstances are serious, the relevant business permits shall be revoked. The directly responsible persons in charge and other directly responsible persons shall be given a warning and be fined not less than RMB 200,000 yuan but not more than RMB 2 million yuan.

A futures business institution that commits any of the acts prescribed in Article 78 of this Law and thus causes losses to traders shall bear compensatory liability according to law.

Article 136   Whoever, in violation of the provisions of Article 11, 80, or 92 of this Law, illegally establishes a futures trading venue or futures clearing institution or otherwise organizes futures trading, the illegal gains shall be confiscated and a fine of not less than one time but not more than ten times the amount of the illegal gains shall be imposed. If there are no illegal gains or if the illegal gains are less than RMB 1 million yuan, a fine of not less than RMB 1 million yuan but not more than RMB 10 million yuan shall be imposed. The directly responsible persons in charge and other directly responsible persons shall be given a warning and be fined not less than RMB 200,000 yuan but not more than RMB 2 million yuan. Any illegally established futures trading venue shall be banned by the relevant people’s government at or above the county level.

Whoever organizes derivatives trading without approval in violation of the provisions of Article 30 of this Law, or any financial institution that engages in derivatives trading without approval or ratification in violation of the provisions of Article 31 of this Law shall be punished in accordance with the provisions of the preceding paragraph.

Article 137   A futures trading venue or futures clearing institution that violates the provisions of Article 17, Article 40, or the second paragraph of Article 85 of this Law shall be ordered to make rectification and be given a warning, with the illegal gains confiscated and a fine of not less than one time but not more than ten times the amount of the illegal gains imposed. If there are no illegal gains or if the illegal gains are less than RMB 200,000 yuan, a fine of not less than RMB 200,000 yuan but not more than RMB 2 million yuan shall be imposed. If the circumstances are serious, the futures trading venue or futures clearing institution shall be ordered to suspend business operation for rectification. The directly responsible persons in charge and other directly responsible persons shall be given a warning and be fined not less than RMB 50,000 yuan but not more than RMB 500,000 yuan.

Article 138   A futures trading venue or futures clearing institution that publishes price predictions in violation of the provisions of the third paragraph of Article 88 of this Law shall be ordered to make rectification and be given a warning, with a fine of not less than RMB 200,000 yuan but not more than RMB 2 million yuan imposed. The directly responsible persons directly in charge and other directly responsible persons shall be given a warning and be fined not less than RMB 50,000 yuan but not more than RMB 500,000 yuan.

Article 139   A futures service provider that, in violation of the provisions of Article 98 of this Law, engages in futures services but fails to furnish relevant materials as required shall be ordered to make rectification, and may be fined not more than RMB 200,000 yuan.

Article 140   A futures service provider such as an accounting firm, a law firm, or an asset valuation firm that, in violation of the provisions of Article 99 of this Law, prepares or issues a document containing a false record, misleading representation, or major omission due to failure to act with due diligence, shall be ordered to make rectification, with the business income generated therefrom confiscated and a fine of not less than one time but not more than ten times the amount of the business income imposed. If there is no business income or if the business income is less than RMB 500,000 yuan, a fine of not less than RMB 500,000 yuan but not more than RMB 5 million yuan shall be imposed. The directly responsible persons in charge and other directly responsible persons shall be given a warning and be fined not less than RMB 200,000 yuan but not more than RMB 2 million yuan.

A futures service provider that commits any of the illegal acts in the preceding paragraph and thus causes losses to others shall bear compensatory liability according to law.

Article 141   A delivery facility that commits any of the acts set out in Article 100 of this Law shall be ordered to make rectification and be given a warning, with the illegal gains confiscated and a fine of not less than one time but not more than ten times the amount of the illegal gains imposed. If there are no illegal gains or if the illegal gains are less than RMB 100,000 yuan, a fine of not less than RMB 100,000 yuan but not more than RMB 1 million yuan shall be imposed. If the circumstances are serious, the relevant futures trading venue shall be ordered to suspend or revoke the qualification of the delivery facility. The directly responsible persons in charge and other directly responsible persons shall be given a warning and be fined not less than RMB 50,000 yuan but not more than RMB 500,000 yuan.

Article 142   An information technology service provider that fails to file for the record in violation of the provisions of Article 101 of this Law shall be ordered to make rectification and may be fined not more than RMB 200,000 yuan.

An information technology service provider that, in violation of the provisions of Article 101 of this Law, provides services that do not meet the information security technical rules and standards of the state or the futures industry shall be ordered to make rectification, with the business income generated therefrom confiscated and a fine of not less than one time but not more than ten times the amount of the business income imposed. If there is no business income or if the business income is less than RMB 500,000 yuan, a fine of not less than RMB 500,000 yuan but not more than RMB 5 million yuan shall be imposed. The directly responsible persons in charge and other directly responsible persons shall be given a warning and be fined not less than RMB 200,000 yuan but not more than RMB 2 million yuan.

Article 143   A futures business institution, futures trading venue, futures clearing institution, or non-futures business institution clearing participants, in violation of the provisions of Article 116 of this Law, fails to draw, manage, or use risk reserves according to regulations shall be ordered to make rectification and be given a warning. The directly responsible persons in charge and other directly responsible persons shall be given a warning and be fined not less than RMB 100,000 yuan but not more than RMB 1 million yuan.

Article 144   A futures business institution, futures trading venue, futures clearing institution, futures service provider, or non-futures business institution clearing participant that, in violation of the provisions of Article 117 of this Law, fails to duly and properly preserve the information and materials relating to its business operation, shall be ordered to make rectification and be given a warning, with a fine of not less than RMB 100,000 yuan but not more than RMB 1 million yuan imposed. In the case of divulging, concealing, forging, tampering with, or damaging the relevant documents or materials, the violating institution concerned shall be ordered to make rectification and be given a warning, with a fine of not less than RMB 200,000 yuan but not more than RMB 2 million yuan imposed. If the circumstances are serious, a fine of not less than RMB 500,000 yuan but not more than RMB 5 million yuan shall be imposed, and the relevant business permits of the institution shall be suspended or revoked, or the institution shall be prohibited from engaging in relevant business activities. The directly responsible persons in charge and other directly responsible persons shall be given a warning and be fined not less than RMB 100,000 yuan but not more than RMB 1 million yuan.

Article 145   An overseas futures trading venue or futures business institution that, in violation of the provisions of Article 118 or 120 of this Law, fails to apply to the futures regulatory authority under the State Council for registration, shall be ordered to make rectification, with the illegal gains confiscated and a fine of not less than one time but not more than ten times the amount of the illegal gains imposed. If there are no illegal gains or if the illegal gains are less than RMB 500,000 yuan, a fine of not less than RMB 500,000 yuan but not more than RMB 5 million yuan shall be imposed. The directly responsible persons in charge and other directly responsible persons shall be given a warning and be fined not less than RMB 100,000 yuan but not more than RMB 1 million yuan.

Article 146   A domestic entity or individual that violates the provisions of the first paragraph of Article 120 of this Law shall be ordered to make rectification and be given a warning, with the illegal gains confiscated and a fine of not less than RMB 100,000 yuan but not more than 1 million yuan imposed. If the circumstances are serious, the entity or individual shall be suspended from conducting futures trading in overseas markets. The directly responsible persons in charge and other directly responsible persons shall be given a warning and be fined not less than RMB 50,000 yuan but not more than RMB 500,000 yuan.

Article 147   A representative office established within the territory of the People’s Republic of China by an overseas futures trading venue or a staff member of such a representative office that, in violation of the provisions of Article 121 of this Law, engages in any revenue-generating business activity either plainly or in a disguised form, shall be ordered to make rectification and be given a warning, with the illegal gains confiscated and a fine of not less than one time but not more than ten times the amount of the illegal gains imposed. If there are no illegal gains or if the illegal gains are less than RMB 500,000 yuan, a fine of not less than RMB 500,000 yuan but not more than RMB 5 million yuan shall be imposed. The directly responsible persons in charge and other directly responsible persons shall be given a warning and be fined not less than RMB 100,000 yuan but not more than RMB 1 million yuan.

Article 148   Whoever, in violation of the provisions of Article 122 of this Law, conducts marketing, promotion, or solicitation activities within the territory of the People’s Republic of China for a futures market, shall be ordered to make rectification and be given a warning, with the illegal gains confiscated and a fine of not less than one time but not more than ten times the amount of the illegal gains imposed. If there are no illegal gains or if the illegal gains are less than RMB 500,000 yuan, a fine of not less than RMB 500,000 but not more than RMB 5 million yuan shall be imposed. The directly responsible persons in charge and other persons directly responsible shall be given a warning and be fined not less than RMB 100,000 yuan but not more than RMB 1 million yuan.

Article 149   Whoever refuses or obstructs the performance of the supervisory duty of inspection or investigation by the futures regulatory authority under the State Council or by a department authorized by the State Council and their personnel shall be ordered to make rectification, with a fine of not less than RMB 100,000 yuan but not more than RMB 1 million yuan imposed, and be given administrative penalties for public security violation by the public security organ according to law.

Article 150   The futures regulatory authority under the State Council may impose debarment from the futures market on the responsible persons in a serious case of violation of laws, administrative regulations, or the regulations of the futures regulatory authority under the State Council.

For the purposes of this Law, “debarment from the futures market” in the preceding paragraph means the prohibition, either for a specific period or for life, from engaging in futures trading activities, conducting futures-related business activities, or serving as a director, supervisor, member of senior management, or the principal of a futures business institution, futures trading venue, or futures clearing institution.

Article 151   The administrative penalties provided for in this Law shall be determined by the futures regulatory authority under the State Council or the departments authorized by the State Council in accordance with their respective duties and responsibilities designated by the State Council. Where the administrative penalties are otherwise provided for in laws and administrative regulations, the relevant provisions shall prevail.

Article 152   A staff member of the futures regulatory authority under the State Council or of a department authorized by the State Council who fails to perform the duties provided for in this Law, abuses his power, neglects his duty, takes advantage of his office to seek improper interests, or divulges commercial secrets of the relevant entity or individual that has come to his knowledge, shall be held liable according to law.

Article 153   Whoever commits a violation of this Law, which constitutes a crime, shall be held criminally liable according to law.

Article 154   Where an entity or individual is liable for a violation of this Law and must pay civil compensation, fines and penalties and turn in illegal gains, if its or his assets are insufficient to pay them all, priority shall be given to making civil compensation.

Chapter XIII     Supplementary Provision

Article 155   This Law shall come into force on August 1, 2022.