Futures in China
Administrative Regulations on Futures Trading (Effective as of April 15, 2007) 2014-09-01
Updated: April 5, 2007
 
CHAPTER 1 - GENERAL PRINCIPLES
 
Article 1 These Regulations are formulated for the purposes of standardizing futures transactions, strengthening supervision and administration over futures trading, safeguarding the order of futures market, controlling risks and protecting the lawful rights and interests of parties in futures transactions and the public interest, and promoting active and stable development of the futures market.
 
Article 2 The provisions of these Regulations shall be complied by all entities and individuals engaging in futures trading, including trading in commodities and financial futures contracts, options contracts and their related activities.
 
Article 3 Futures trading activities shall comply with the principles of transparency, fairness, justness, honesty and trustworthiness. Fraud, insider trading, manipulation of futures trading prices and any other unlawful conduct shall be prohibited.
 
Article 4 Futures trading shall be conducted at futures exchanges established pursuant to the law or any other trading premises approved by the futures supervision and administration department of the State Council.
 
Futures trading conducted outside futures trading premises approved by the futures supervision and administration department of the State Council shall be prohibited; futures trading under any other pretext shall be prohibited.
 
Article 5 The futures supervision and administration department of the State Council shall implement centralized and uniformed supervision and administration over the futures market.
 
The branches of the futures supervision and administration department of the State Council shall perform supervision and administrative functions pursuant to the relevant provisions of these Regulations and the authority of the futures supervision and administration department of the State Council.
 
CHAPTER 2 - FUTURES EXCHANGE
 
Article 6 The establishment of a futures exchange shall be subject to the examination and approval of the futures supervision and administration department of the State Council.
 
No entity or individual may establish a futures exchange or organize any other form of futures trading and related activities without the approval of the futures supervision and administration department of the State Council.
 
Article 7 A futures exchange shall not be profit-motivated and shall exercise self-regulation pursuant to its articles of association. A futures exchange shall be civilly liable to the extent of all its assets. The person-in-charge of a futures exchange shall be appointed and removed by the futures supervision and administration department of the State Council.
 
The futures exchange administrative measures shall be formulated by the futures supervision and administration department of the State Council.
 
Article 8 The Members of a futures exchange shall comprise enterprise legal persons or economic entities duly incorporated in the People's Republic of China.
 
A futures exchange may implement a tiered system of settlement among its members. A futures exchange which implements a tiered system of settlement system shall comprise settlement members and non-settlement members.
 
The settlement qualifications of settlement members shall be subject to the approval of the futures supervision and administration department of the State Council. The futures supervision and administration department of the State Council shall decide whether to approve or not to approve an application for settlement qualifications within three months from the date an application for settlement qualifications is accepted.
 
Article 9 A person may not, under circumstances stipulated in Article 147 of the Company Law of the People's Republic of China or any of the following circumstances below, hold the position of a person-in-charge or a finance accounting personnel of the futures exchange:
 
(1) where the person was dismissed for unlawful conduct or a disciplinary violation while in charge of a futures exchange, stock exchange or securities registration and settlement firm or while holding directorship, supervisorship or a senior management position in a futures trading company or securities company, or any other person stipulated by the futures supervision and administration department of the State Council, and a five-year period has not lapsed since the date of dismissal; or
 
(2) where the person is a lawyer, certified public accountant or professional of an investment consultancy firm, financial consultancy firm, credit rating agency, asset valuation firm or certification agency and the person's professional qualifications were revoked as a result of unlawful conduct or a disciplinary violation, and a five-year period has not lapsed since the date of revocation.
 
Article 10 A futures exchange shall, pursuant to the provisions of these Regulations and the provisions of the futures supervision and administration department of the State Council, establish and improve various system rules, strengthen supervision and administration over the control of trading activity risks, their members and their staff. A futures exchange shall perform the following duties:
 
(1) provide trading premises, facilities and services;
 
(2) draw contracts and make contract listing arrangements;
 
(3) organize and supervise trading, settlement and delivery;
 
(4) ensure contract performance;
 
(5) conduct supervision and administration over members pursuant to its articles of association and trading rules; and
 
(6) perform any other duty stipulated by the futures supervision and administration department of the State Council.
 
A futures exchange shall not participate in futures trading directly or indirectly. A futures exchange may not engage in investment trusts, share investments, investments in immovable property not used by the exchange and other unrelated functions, without prior examination by the futures supervision and administration department of the State Council and approval by the State Council.
 
Article 11 A futures exchange shall establish and improve on the following risk management systems pursuant to the relevant provisions of the State:
 
(1) a system for margins;
 
(2) a system for daily no-liability settlement;
 
(3) a system for limiting fluctuations;
 
(4) a system for reporting position limits and key account positions;
 
(5) a risk reserve system;
 
(6) any other risk management system stipulated by the futures supervision and administration department of the State Council.
 
A futures exchange which implements the tiered system of settlement shall also establish and improve on a system for settlement guarantees.
 
Article 12 Where an abnormality occurs in the futures market, the futures exchange may, pursuant to the authority and procedures stipulated in its articles of association, adopt the following emergency measures and immediately report to the futures supervision and administration department of the State Council:
 
(1) raise the margin;
 
(2) adjust the range of the fluctuation limit;
 
(3) limit the largest positions of members or clients;
 
(4) suspend trading temporarily;
 
(5) adopt any other emergency measures.
 
Abnormality referred to in the preceding paragraph shall mean the manipulation of futures trading prices in transactions or the occurrence of a sudden unavoidable event including any other circumstance stipulated by the futures supervision and administration department of the State Council.
 
The futures exchange shall lift the emergency measures promptly upon elimination of the abnormality.
 
Article 13 A futures exchange shall obtain the approval of the futures supervision and administration department of the State Council before engaging in the following matters:
 
(1) draft or revise the articles of association or trading rules;
 
(2) list, terminate, cancel or resume a type of commodity;
 
(3) list, modify or terminate a contract;
 
(4) change residential or business address;
 
(5) merge, divide or dissolve; or
 
(6) any other matter stipulated by the futures supervision and administration department of the State Council.
 
The futures supervision and administration department of the State Council shall seek the opinion of the relevant department of the State Council before approving a listing of a new type of commodity in a futures exchange.
 
Article 14 The revenue and gains of a futures exchange shall be administered and utilized pursuant to the relevant provisions of the State, with priority given to ensuring the operations and improvement of the futures trading premises and facilities.
 
CHAPTER 3 - FUTURES TRADING COMPANIES
 
Article 15 A futures trading company must be a financial institution established pursuant to the provisions of the Company Law of the People's Republic of China and these Regulations to engage in futures trading. The establishment of a futures trading company shall be subject to the approval of the futures supervision and administration department of the State Council and incorporation must be duly registered with the company registration authorities.
 
No entity or individual may establish a futures trading company on its own or under any other pretext to engage in futures trading without obtaining the approval of the futures supervision and administration department of the State Council.
 
Article 16 An application for the incorporation of a futures trading company must comply with the provisions of the Company Law of the People's Republic of China and satisfy the following criteria:
 
(1) the minimum registered capital shall be RMB30 million;
 
(2) the directors, supervisors and senior management personnel possess appointment qualifications and the operational staff possess qualifications to engage in futures trading;
 
(3) the company's articles of association complies with the provisions of the laws and administrative regulations;
 
(4) the key shareholders and the actual controlling party have the ability to maintain continuous profitability and a fine reputation with no record of major violation of law or discipline in the last three years;
 
(5) the business premises and operational facilities are acceptable;
 
(6) the company has proper systems for risk management and internal control; and
 
(7) the company satisfies any other criteria stipulated by the futures supervision and administration department of the State Council.
 
The futures supervision and administration department of the State Council may raise the minimum registered capital pursuant to the principles of prudent regulation and the various operational risks. The registered capital shall be fully paid up. The capital shall be contributed by shareholders in cash or in the form of non-monetary assets required by the futures company for futures trading, with the cash contribution constituting not less than 85% of the total capital.
 
The futures supervision and administration department of the State Council shall examine an application for the incorporation of futures trading company pursuant to the principles of prudent regulation and decide whether to approve or not to approve the application within six months from the date of application.
 
No entity or individual may, appoint another to hold or manage the equity of a futures trading company, or accept an appointment to hold or manage the equity of a futures trading company, without obtaining the approval of the futures supervision and administration department of the State Council.
 
Article 17 A permit system shall be implemented for futures trading companies where the futures supervision and administration department of the State Council issues permits for futures trading according to the respective types of commodities and financial futures traded. A futures trading company may, apart from applying for a permit to engage in domestic commodities brokerage operations, also apply for permits in overseas commodities brokerage operations, futures investment consulting and any other futures trading operations stipulated by the futures supervision and administration department of the State Council.
 
Unless the contrary is stipulated by the laws and administrative regulations or the futures supervision and administration department of the State Council, futures trading companies may not engage in activities unrelated to futures trading.
 
A futures trading company may not engage in trading of its own futures or under any other pretext.
 
A futures trading company may not provide financing to its shareholders, actual controlling party or any other interested parties or provide guarantees to external parties.
 
Article 18 A futures trading company engaging in brokerage business shall accept entrustment by its clients to conduct futures trading in its own name on behalf of the client and the client shall be liable for the trading consequences.
 
Article 19 A futures trading company shall obtain the approval of the futures supervision and administration department of the State Council before engaging in the following matters:
 
(1) merge, divide, suspend operations, dissolve or enter into bankruptcy;
 
(2) change the company format;
 
(3) change the scope of business;
 
(4) change the registered capital;
 
(5) change 5% or more of the shareholding;
 
(6) incorporate, acquire, participate in the equity or terminate an overseas futures trading-related entity;
 
(7) any other matter stipulated by the futures supervision and administration department of the State Council.
 
The futures supervision and administration department of the State Council shall decide whether to approve or not to approve a matter stipulated in item (4) or item (7) of the preceding paragraph within 20 days upon acceptance of the application; the futures supervision and administration department of the State Council shall decide whether to approve or not to approve a matter stipulated in the other items of the preceding paragraph within two months upon acceptance of the application.
 
Article 20 A futures trading company shall obtain the approval of a branch of the futures supervision and administration department of the State Council before engaging in the following matters:
 
(1) change of legal representative;
 
(2) change of residential or business address;
 
(3) establish or terminate a branch in China;
 
(4) change of business address, person-in-charge or scope of business of a branch in China; or
 
(5) any other matter stipulated by the futures supervision and administration department of the State Council.
 
The branch of the futures supervision and administration department of the State Council shall decide whether to approve or not to approve a matter stipulated in item (1), item (2), item (4) or item (5) of the preceding paragraph within 20 days upon acceptance of the application; the branch of the futures supervision and administration department of the State Council shall decide whether to approve or not to approve a matter stipulated in item (3) of the preceding paragraph within two months upon acceptance of the application.
 
Article 21 The futures supervision and administration department of the State Council shall revoke the futures trading permit pursuant to the law where a futures trading company or its branch is involved in any of the circumstances stipulated in Article 70 of the Law of the People's Republic of China on Administrative Licensing or under any of the following circumstances:
 
(1) the business license is revoked by the company registration authorities pursuant to the law;
 
(2) the company or the branch has not commenced operations after three months from incorporation without a proper reason, or has suspended operations for more than three months consecutively without a proper reason after operations has commenced;
 
(3) the voluntary submission of an application for cancellation; or
 
(4) any other circumstance stipulated by the futures supervision and administration department of the State Council.
 
The futures trading company shall settle any relevant futures trading and return the clients' margins and other assets pursuant to law before its futures trading permit is cancelled. The branch of the futures trading company shall terminate all trading activity and deal with the clients' assets appropriately before its operation permit is cancelled.
 
Article 22 Futures trading companies shall, establish, improve on and strictly execute the business management rules and the system of risk management and comply with the system of information disclosure; ensure the proper safe keeping of clients' margins; and report the list of key accounts and trading information to the futures exchange pursuant to the provisions of the futures exchange.
 
Article 23 Other futures trading related entities that engage in futures investment consulting including entities that provide intermediary services to futures trading companies must obtain business qualifications approved by the futures supervision and administration department of the State Council; the specific measures shall be formulated by the futures supervision and administration department of the State Council.
 
CHAPTER 4 - BASIC RULES FOR FUTURES TRADING
 
Article 24 Only members of a futures exchange may conduct futures trading in the futures exchange.
 
Article 25 A futures trading company shall, prior acceptance of a client's entrustment to conduct futures trading for the client, present the client with a letter explaining the risks, and conclude a written contract with the client after the client has acknowledged and endorsed the letter explaining the risks. A futures trading company must not engage in futures trading arbitrarily without a client's entrustment or in disregard of the contents of the client's entrustment.
 
A futures trading company must not guarantee a client profits; or agree with a client to share the gains or co-bear the risks in the course of brokering.
 
Article 26 The following entities and individuals may not engage in futures trading and no futures trading company may accept their entrustment to conduct futures trading on their behalf:
 
(1) State authorities and institutions;
 
(2) staff and members of the futures supervision and administration department of the State Council, futures exchange, agency supervising and controlling the safe keep of futures' margins and a futures association;
 
(3) persons barred from entering the securities and futures markets;
 
(4) entities and individuals who are unable to provide evidentiary materials that they have an account opened; and
 
(5) any other entity and individual prohibited from engaging in futures trading by the futures supervision and administration department of the State Council.
 
Article 27 A client may transmit trading instructions to a futures trading company in writing, by telephone, Internet or any other method stipulated by the futures supervision and administration department of the State Council. Clients shall give specific and complete trading instructions.
 
A futures trading company must not conceal an important fact or use any other improper means to induce the client to give trading instructions.
 
Article 28 A futures exchange shall announce timely, the trading volume, traded prices, position volumes, highest and lowest prices, opening and closing prices and other real time market information that should be announced for commodities listed, and ensure the veracity and accuracy of real time market information. A futures exchange must not announce forecasted pricing information.
 
No entity or individual may announce any real time futures trading market information without the permission of the futures exchange.
 
Article 29 A system of margins for futures trading shall be strictly implemented. The margins collected by a futures exchange from its members and the margins collected by a futures trading company from its clients must not be lower than the standard stipulated by the futures supervision and administration department of the State Council and the futures exchange, must be kept separate from the individual funds of the futures exchange or the futures trading company, and be deposited in a special account.
 
The margins collected by a futures exchange from its members shall belong to the respective members and be used strictly for the settlement of members' transactions and not any other purpose.
 
The margins collected by a futures trading company from its customers shall belong to the respective customers and shall be used strictly for the following purposes and not any other purpose:
 
(1) payment of usable funds pursuant to the client's request;
 
(2) deposit of the margin for the client, and payment of handling fees and taxes; and
 
(3) any other circumstance stipulated by the futures supervision and administration department of the State Council.
 
Article 30 A futures trading company shall open, for each client, an individual special account with a specific trading reference number assigned; trading for different clients using the same trading reference number shall be prohibited.
 
Article 31 Where a futures trading company operates a futures brokerage business and any other futures trading activity concurrently, it must separate the businesses and funds strictly without mixing its business operations.
 
Article 32 The members and clients of a futures exchange may use standard warrants, treasury bonds and other securities of stable value and are highly liquid as margin deposits for futures trading. The type of securities, method of calculating the value and the proportion of such securities as margin deposits shall be stipulated by the futures supervision and administration department of the State Council.
 
Article 33 The business qualifications for financial institutions in the banking industry to engage in the safe keep of futures trading margins and futures trading settlement shall be approved by the futures supervision and administration department of the State Council, after the banking regulatory department of the State Council has conducted examination and given its consent.
 
Article 34 The settlement members of a future exchange, a futures trading company and a company other than a futures trading company shall allocate, manage and utilize the risk reserves pursuant to the provisions of the futures supervision and administration department and the finance department of the State Council without misappropriating the funds.
 
Article 35 The fee items, rates and administrative measures for the collection of futures trading fees shall be formulated by the relevant departments of the State Council uniformly and publicly announced.
 
Article 36 Futures trading shall be conducted through an open and centralized method of trading or through any other method approved by the futures supervision and administration department of the State Council.
 
Article 37 The settlement of futures trading shall be organized and conducted uniformly by a futures exchange.
 
Futures exchanges shall implement the daily no-liability system of settlement. Futures exchanges shall promptly notify their members of the settlement result on the same day.
 
A futures trading company shall conduct settlement for its clients pursuant to the settlement result of the futures exchange and promptly notify the client of the settlement result via the method agreed with the client. A client shall promptly enquire and properly deal with its own trading positions.
 
Article 38 Members of a futures exchange shall promptly top up the margin or voluntarily close their positions when the margin is inadequate. Where a member fails to top up the margin or close its position voluntarily within the period stipulated by the futures exchange, the futures exchange shall close the position under the members' contract involuntarily; the relevant expenses and losses incurred for an involuntary closure of the positions shall be borne by the member.
 
A client shall promptly top up the margin or voluntarily close the position when the margin is inadequate. Where a client fails to top up the margin or close its positions voluntarily within the period stipulated by the futures trading company, the futures trading company shall close the positions under the client's contract involuntarily; the relevant expenses and losses incurred for an involuntary closure of positions shall be borne by the client.
 
Article 39 Delivery in futures trading shall be organized and conducted uniformly by a futures exchange.
 
The delivery warehouse shall be designated by a futures exchange. A futures exchange may not restrict the total quantity of physical delivery, and shall conclude an agreement specifying the rights and obligations of both parties with the delivery warehouse. A delivery warehouse shall not:
 
(1) issue false order forms;
 
(2) violate the business rules of the futures exchange or restrict the inflow and outflow of commodities delivered;
 
(3) divulge commercial secrets relating to futures trading;
 
(4) participate in futures trading in violation of the relevant provisions of the State; or
 
(5) commit any other act prohibited by the futures supervision and administration department of the State Council.
 
Article 40 Where a member defaults in a futures trading, the futures exchange shall first apply the member's margin to bear the default liability; where the margin is inadequate, the futures exchange shall apply the risk reserve and its own funds to bear the default liability on behalf of the member, and have a corresponding right to claim against the member.
 
Where a client defaults in a futures trading, the futures trading company shall first apply the client's margin to bear the default liability; where the margin is inadequate, the futures trading company shall apply the risk reserve and its own funds to bear the default liability on behalf of the client, and have a corresponding right to claim against the client.
 
Article 41 A futures exchange which implements a members' tiered system of settlement shall collect settlement guarantees from the settlement members. A futures exchange shall only settle, collect and recover margins from the settlement members, and use the settlement guarantees, risk reserves and its own funds to bear default liability on behalf of settlement members, and adopt any other related measures. Settlement members shall settle, collect and recover margins from non-settlement members and bear default liability on behalf of non-settlement members, and adopt any other related measures.
 
Article 42 The settlement members of a futures exchange, futures trading company and a company other than a futures trading company shall ensure the integrity and security of the futures traded, any settlement and the materials delivered.
 
Article 43 No entity or individual may fabricate or transmit false information relating to futures trading, or manipulate futures trading prices through malicious conspiracy, trading collaboration or by any other means.
 
Article 44 No entity or individual may use credit funds or fiscal funds in violation of rules to conduct futures trading.
 
Financial institutions in the banking industry engaging in financing or the provision of guarantees for futures trading shall be subject to the approval of the banking regulatory department of the State Council.
 
Article 45 State-owned enterprises and State-owned holding enterprises engaging in futures trading in China and overseas shall adhere to the principle of hedging, and strictly comply with the relevant provisions of the State-owned assets supervision and administration department of the State Council and other relevant authorities on futures market participation by enterprises using State-owned assets.
 
Article 46 The commerce department of the State Council shall verify the types of commodities in overseas futures trading traded by entities or individuals in China.
 
The purchase and sale of foreign currencies and foreign exchange income and expenditure in overseas futures trading shall comply with the relevant foreign exchange control provisions of the State.
 
The measures on overseas futures trading conducted by entities and individuals in China shall be formulated by the futures supervision and administration department of the State Council jointly with the commerce, State-owned assets supervision and administration, banking regulatory and foreign exchange control departments of the State Council, and implemented upon the approval of the State Council.
 
CHAPTER 5 - FUTURES ASSOCIATIONS
 
Article 47 A futures association shall be a self-regulating organization in the futures industry with a social organization legal personality.
 
Futures trading companies and any other entity that specializes in futures trading shall join a futures association and pay membership fees.
 
Article 48 The organ of power of a futures association shall be the members' congress comprising all members.
 
The articles of association of a futures association shall be formulated by the members' congress and filed with the futures supervision and administration department of the State Council for record.
 
A futures association shall form a council. The council members shall be elected pursuant to the provisions of the articles of association.
 
Article 49 A futures association shall perform the following duties:
 
(1) educate and organize members in the compliance of laws, rules and policies on futures;
 
(2) formulate industry self-regulation rules to be complied by members, supervise and monitor members' conduct and take disciplinary action against members who violate the association's articles of association and self-regulation rules;
 
(3) be responsible for the accreditation, administration and revocation of the qualifications of futures professionals;
 
(4) receive clients' complaints relating to futures trading and mediate disputes between members and disputes between members and their clients;
 
(5) safeguard the lawful rights and interests of members pursuant to law and feedback members' suggestions and requests to the futures supervision and administration department of the State Council;
 
(6) organize vocational training for futures professionals and develop business exchanges between members;
 
(7) organize members to conduct research in the development, operation and the other relevant contents of the futures industry; and
 
(8) perform any other duties stipulated by the articles of association of the futures association.
 
The business activities of the futures association shall be guided and supervised by the futures supervision and administration department of the State Council.
 
CHAPTER 6 - SUPERVISION AND ADMINISTRATION
 
Article 50 The futures supervision and administration department of the State Council shall conduct supervision and administration over the futures market and perform the following duties pursuant to the law:
 
(1) formulate rules and regulations relevant to the supervision and administration of the futures market and exercise examination and approval authority pursuant to the law;
 
(2) conduct supervision and administration over the listing, trading, settlement and delivery of commodities, and any other futures trading or related activities;
 
(3) conduct supervision and administration over the futures trading activities of futures exchanges, futures trading companies and other futures trading entities, settlement members of companies other than futures trading companies, agencies that supervise and control the safe keep of futures' margins, banks that safe keep futures' margins, delivery warehouses and other market participants;
 
(4) formulate the qualification accreditation standards and administrative measures for futures professionals and supervise the implementation of such standards and administrative measures;
 
(5) supervise and monitor the disclosure of information relating to futures trading;
 
(6) guide and supervise the activities of futures associations;
 
(7) investigate and penalize any conduct in violation of laws and administrative regulations on the supervision and administration of the futures market;
 
(8) develop international exchange and cooperation activities relating to the supervision and administration of the futures market; and
 
(9) perform any other duty stipulated by laws and administrative regulations.
 
Article 51 The futures supervision and administration department of the State Council may adopt the following measures when performing duties pursuant to the law:
 
(1) conduct onsite inspections at futures exchanges, futures trading companies and other futures trading entities, settlement members of companies other than futures trading companies, agencies that supervise and control the safe keep of futures' margins and delivery warehouses;
 
(2) enter premises where alleged unlawful conduct has occurred to conduct investigation and gather evidence;
 
(3) question the parties concerned and any other entity and individual related to a subject matter under investigation, and require them to provide explanations to matters related to the subject matter under investigation;
 
(4) inspect and make copies of the property rights registration and any other material relevant to the subject matter under investigation;
 
(5) inspect and make copies of the futures trading records, financial accounting materials and other relevant documents and materials of the parties concerned and any other entity and individual related to the subject matter under investigation; and seal any document and material which may be removed, concealed or destroyed;
 
(6) inquire into the margin account and bank account of an entity related to the subject matter under investigation;
 
(7) when an investigation into the manipulation of futures trading prices, insider trading or any other significant unlawful futures trading conduct is ongoing, the futures trading activity of the party under investigation may, subject to approval of the key person-in-charge of the futures supervision and administration department of the State Council, be restricted for a period not exceeding 15 market trading days; the restriction period may be extended to 30 market trading days where the case is complex; and
 
(8) any other measures stipulated by laws and administrative regulations.
 
Article 52 Futures exchanges, futures trading companies and other futures trading entities and agencies that supervise and control the safe keep of futures' margins shall submit financial statements, business operations materials and other relevant materials to the futures supervision and administration department of the State Council.
 
The futures supervision and administration department of the State Council shall assign specific personnel to examine and prepare examination reports on the annual reports submitted by futures trading companies and futures trading entities. The examination personnel shall sign on the examination reports. The futures supervision and administration department of the State Council shall take prompt corresponding measures for issues discovered during the examination.
 
Where necessary, the futures supervision and administration department of the State Council may require submission of the relevant materials by, the settlement members of companies other than futures trading companies, the delivery warehouses, the shareholders of a futures trading company, the actual controlling party or any other related party.
 
Article 53 The futures supervision and administration department of the State Council shall perform duties pursuant to the law. Entities and individuals under inspection or investigation shall cooperate with the futures supervision and administration department of the State Council in their conduct of supervision and inspection or investigation, and provide the relevant documents and materials truthfully without refusing or obstructing the inspection or investigation or concealing any information. Other relevant authorities and organizations shall support and cooperate accordingly.
 
Article 54 The State shall establish a futures investors' protection fund based on the futures market's development requirements.
 
Detailed measures on the raising, administration and use of the futures investors' protection fund shall be formulated by the futures supervision and administration department of the State Council jointly with the finance department of the State Council.

Article 55 The futures supervision and administration department of the State Council shall establish and improve on a system of control for the safe keep of futures' margins, and establish a regulatory agency for the safe keep of futures' margins.
 
Clients, futures exchanges, futures trading companies and futures trading entities, settlement members companies other than futures trading companies and banks that safe keep futures' margins shall comply with the provisions of the futures supervision and administration department of the State Council on the regulation and safe keep of margins.
 
Article 56 The agency supervising and controlling the safe keep of futures' margins shall monitor the margins pursuant to the relevant provisions, conduct daily audits and report the discovery of any issue to the futures supervision and administration department of the State Council immediately. The futures supervision and administration department of the State Council shall handle a matter promptly according to the circumstances and pursuant to the relevant provisions.
 
Article 57 The futures supervision and administration department of the State Council shall implement a system for administering the qualifications of the directors, supervisors and senior management personnel of the futures exchange, futures trading companies and other futures trading entities, agencies supervising and controlling the safe keep of futures' margins and other futures professionals.
 
Article 58 The futures supervision and administration department of the State Council shall formulate going concern rules for futures trading companies and stipulate the net capital to net assets ratio, the ratios for net capital against the scale of domestic futures brokerages and against the scale of overseas futures brokerages, and the current assets to current liabilities ratio for futures trading companies and other risk indices; and indicate the requirements in trading conditions, risk management, internal control, safe keep of margins, and interested party transactions for futures trading companies and their branches.
 
Article 59 Where a futures trading company and its branch fail to comply with going concern rules or display signs of business risks, the futures supervision and administration department of the State Council may adopt regulatory measures such as holding regulatory talks with the futures trading company and its directors, supervisors and senior management personnel, issue reminders, record the matter into the creditworthiness database, or order the futures trading company to make a correction within a stipulated period, and inspect the status of correction and acknowledge acceptance of the correction.
 
Where a futures trading company fails to make a correction within the stipulated period and its conduct is seriously detrimental to its stable operations and prejudicial to its clients' rights and interests, or where a futures trading company has allegedly committed a serious violation of laws and regulations and is under investigation by the futures supervision and administration department of the State Council, the futures supervision and administration department of the State Council may, based on the circumstances, adopt the following measures:
 
(1) restrict or temporarily suspend part of the futures trading activity;
 
(2) cease to approve new businesses or branches;
 
(3) limit the distribution of bonuses, payment of remuneration and provision of welfare incentives to the directors, supervisors and senior management personnel;
 
(4) restrict the transfer of property or create other rights over property;
 
(5) order the futures trading company to replace its directors, supervisors, senior management personnel or the person-in-charge of the relevant business department or branch or restrict the rights of such a person;
 
(6) restrict the withdrawal and use of the futures trading company's funds or risk reserve; or
 
(7) order the controlling shareholders to transfer their shareholding or restrict the relevant shareholders from exercising shareholder's rights.
 
Where the futures trading company complies with the relevant provisions in laws, administrative regulations and going concern business rules after the correction, the futures supervision and administration department of the State Council shall lift the relevant measures within three days from the acknowledgement of acceptance of the correction.
 
Where the futures trading company fails to satisfy the requirements in the going concern business rules after the correction and the normal operations of the futures trading company is seriously affected, the futures supervision and administration department of the State Council shall have the right to revoke the business permit for all or part of the futures trading business and close down the branches of the futures trading company.
 
Article 60 Where a futures trading company engages in unlawful operations or displays signs of significant risks and is seriously detrimental to the order of the futures market and prejudicial to the interests of its clients, the futures supervision and administration department of the State Council may order the futures trading company to suspend operations for correction or assign a trustee or receiver or adopt other regulatory measures. The following measures may, upon the approval of the futures supervision and administration department of the State Council, be taken against the directors, supervisors, senior management personnel and other directly accountable personnel of the futures trading company:
 
(1) notify the immigration authorities to prevent such persons from leaving China pursuant to the law; or
 
(2) apply for an injunction with the judicial authorities to prohibit the removal, transfer or disposal of properties in any other manner or the creation of other rights over property.
 
Article 61 Where a shareholder of a futures trading company engages in fraudulent capital contribution or withdrawal of capital, the futures supervision and administration department of the State Council shall order the shareholder to make a correction within a stipulated period and may order the shareholder to transfer its shareholding in the futures trading company.
 
The futures supervision and administration department of the State Council may restrict the shareholder's rights before the shareholder corrects the unlawful conduct or transfers the shareholding in the futures trading company.
 
Article 62 Where an abnormality arises in the futures market, the futures supervision and administration department of the State Council may adopt the requisite risk counter-measures.
 
Article 63 The trading software and settlement software of a futures trading company shall satisfy the requirements of secure trading and risk management by the futures trading company and the relevant requirements of the futures supervision and administration department of the State Council on regulation of the safe keep of margins. Where the trading or settlement software of a futures trading company does not satisfy the requirements, the futures supervision and administration department of the State Council shall have the right to require the futures trading company to make an improvement or replacement.
 
The futures supervision and administration department of the State Council may require a futures trading company's supplier of the trading software or settlement software to provide the relevant materials on such software and the supplier shall render cooperation. The futures supervision and administration department of the State Council shall have a duty of confidence in respect of the relevant materials provided by the supplier.
 
Article 64 Where a futures trading company is involved in major legal proceedings, an arbitration, or its equity is frozen or used for the provision of guarantee, or the occurrence of any other significant event, the futures trading company and the relevant shareholders and actual controlling party shall submit a written report to the futures supervision and administration department of the State Council within five days from the occurrence of such an event.
 
Article 65 Accounting firms, law firms, asset valuation firms and other intermediaries that provide the relevant services to futures exchanges, futures trading companies and other market participants shall comply with the relevant laws, administrative regulations and State provisions on futures, and provide the relevant materials required by the futures supervision and administration department of the State Council.
 
Article 66 The futures supervision and administration department of the State Council shall establish a mechanism for information sharing and coordination with the relevant authorities for supervision and administration.
 
The futures supervision and administration department of the State Council may establish a cooperative mechanism with the futures regulatory agencies of other countries or regions to implement cross-border supervision and administration.
 
Article 67 The staff and members of the futures supervision and administration department of the State Council, futures exchanges, agencies supervising and controlling the safe keep of futures' margins and banks that safe keep futures' margin shall remain loyal in their duties, act within the law, fairly and honestly, maintain the confidence of State secrets and the commercial secrets of the parties concerned and not use their official powers to seek improper gains.
 
CHAPTER 7 - LEGAL LIABILITY
 
Article 68 Futures exchanges and settlement members of companies other than futures trading companies with any of the following conduct shall be ordered to make correction or be subject to a warning or confiscation of unlawful gains:
 
(1) acceptance of members in violation of the provisions;
 
(2) collection of handling fees in violation of the provisions;
 
(3) use and distribution of gains in violation of the provisions;
 
(4) failure to announce real time market information or price forecast information according to the provisions;
 
(5) failure to report to the futures supervision and administration department of the State Council pursuant to the provisions;
 
(6) failure to submit the relevant documents and materials to the futures supervision and administration department of the State Council pursuant to the provisions;
 
(7) failure to establish and improve a system for settlement guarantees pursuant to the provisions;
 
(8) failure to allocate, manage or use the risk reserve pursuant to the provisions;
 
(9) violation of the relevant provisions of the futures supervision and administration department of the State Council on regulation of the safe keep of margins;
 
(10) restriction of the total quantity of physical delivery by members;
 
(11) appointment of an unqualified person for the position of a futures professional; or
 
(12) any other act which violates the provisions of the futures supervision and administration department of the State Council.
 
The person-in-charge and other personnel directly accountable for any of the acts stipulated in the preceding paragraphs shall be subject to disciplinary action and a fine ranging from RMB10,000 to RMB100,000.
 
Persons who engage in conduct stipulated in item (2) of the first paragraph of this Article shall be ordered to refund the excess handling fees collected.
 
An agency that supervises and controls the safe keep of futures' margins which engages in any of the conduct stipulated in item (5), item (6), item (9), item (11) and item (12) of the first paragraph of this Article shall be dealt with and penalized pursuant to the provisions of the first and second paragraphs of this Article. A bank that safe keeps futures' margins which engages in any conduct stipulated in item (9) and item (12) of the first paragraph of this Article shall be dealt with and penalized pursuant to the provisions of the first and second paragraphs of this Article.
 
Article 69 Futures exchanges and settlement members of companies other than futures trading companies that engage in any of the following conduct shall be ordered to make correction and be subject to a warning; any unlawful gains shall be confiscated and a fine ranging from one to five times the amount of unlawful gains shall be imposed; where no unlawful gains exist or the amount of unlawful gains is less than RMB100,000, a fine ranging from RMB100,000 to RMB500,000 shall be imposed; where the case is serious, orders for the suspension of operations shall be given to effect corrections:
 
(1) conducting matters stipulated in Article 13 arbitrarily without prior approval;
 
(2) allowing a member to conduct futures trading when the margin is inadequate;
 
(3) participating in futures trading directly or indirectly, or engaging in activity unrelated to its duties in violation of the provisions;
 
(4) collecting margins in violation of the provisions or misappropriating margins;
 
(5) forging or altering a futures trading, settlement or delivery materials or a failure to maintain futures trading, settlement or delivery materials pursuant to the provisions;
 
(6) failing to establish or implement a system for reporting daily no-liability settlements, limiting fluctuations, position limits and key account positions;
 
(7) refusing or obstructing supervision and inspection by the futures supervision and administration department of the State Council;
 
(8) engaging in any other conduct which violates the provisions of the futures supervision and administration department of the State Council.
 
The person-in-charge and other directly accountable personnel for any conduct stipulated in the preceding paragraphs shall be subject to disciplinary action and a fine ranging from RMB10,000 to RMB100,000.
 
An agency that supervises and controls the safe keep of futures' margins which engages in any of the conduct stipulated in item (3), item (7) and item (8) of the first paragraph of this Article shall be dealt with and punished pursuant to the provisions of the first and second paragraphs of this Article.
 
Article 70 Futures trading companies that engage in any of the following conduct shall be ordered to make correction and be subject to a warning; any unlawful gains shall be confiscated and a fine ranging from one to three times the amount of unlawful gains shall be imposed; where no unlawful gains exist or the amount of unlawful gains is less than RMB100,000, a fine ranging from RMB100,000 to RMB300,000 shall be imposed; where the case is serious, the futures trading company shall be ordered to suspend operations for correction or be subject to its futures trading permit being revoked:
 
(1) accepting entrustment by an entity or individual that does not satisfy the stipulated criteria;
 
(2) allowing a client to conduct futures trading when the margin is inadequate;
 
(3) handling a matter stipulated in Article 19 or Article 20 arbitrarily before approval is obtained;
 
(4) engaging in any activity unrelated to futures trading in violation of the provisions;
 
(5) engaging in futures trading directly on its own or under any other pretext;
 
(6) providing financing to its shareholders, actual controlling party or any other interested parties, or providing guarantees to external parties;
 
(7) violating the relevant provisions of the futures supervision and administration department of the State Council on regulation of the safe keep of margins;
 
(8) failing to report or submit the relevant documents or materials to the futures supervision and administration department of the State Council pursuant to the provisions;
 
(9) having a trading or settlement software that fails to comply with the requirements of prudent operations and risk management of the futures trading company and the relevant requirements of the futures supervision and administration department of the State Council on regulation of the safe keep of margins;
 
(10) failing to withdraw, manage and use the risk reserve pursuant to the provisions;
 
(11) forging, altering or failing to keep futures trading, settlement, and delivery materials pursuant to the provisions;
 
(12) appointing an unqualified person as a futures professional;
 
(13) forging, altering, leasing, lending or trading the futures trading permit or operations permit;
 
(14) conducting futures trading for different clients using the same trading reference number;
 
(15) refusing or obstructing supervision and inspection by the futures supervision and administration department of the State Council;
 
(16) engaging in any other conduct which violates the provisions of the futures supervision and administration department of the State Council.
 
The futures trading company's person-in-charge and other directly accountable personnel involved in any of the conduct stipulated in the preceding paragraphs shall be subject to disciplinary action and a fine ranging from RMB10,000 to RMB50,000; where the case is serious, the appointment qualifications or futures professional qualifications shall be suspended or revoked.
 
Futures trading entities other than futures trading companies that engage in any the conduct stipulated in item (8), item (12), item (13), item (15) or item (16) of the first paragraph of this Article shall be penalized pursuant to the provisions of the first and second paragraph of this Article.
 
Where a shareholder, actual controlling party or any other interested party of a futures trading company, arbitrarily entrusts another party or accepts the entrustment by another party, to hold or manage the equity of the futures trading company without approval, or refuses to cooperate in an inspection by the futures supervision and administration department of the State Council, or refuses to perform reporting obligations or provide the relevant information and materials pursuant to the provisions, or the information and materials submitted or provided contain false records, misleading statements or major omissions, Penalties shall be imposed pursuant to the provisions of the first and second paragraphs of this Article.
 
Article 71 Futures trading companies that engage in any of the following fraudulent conduct against their clients shall be ordered to make correction and be subject to a warning; any unlawful gains shall be confiscated and a fine ranging from one to five times the amount of unlawful gains shall be imposed; where no unlawful gains exist or the amount of unlawful gains is less than RMB100,000, a fine ranging from RMB100,000 to RMB500,000 shall be imposed; where the case is serious, the futures trading company shall be ordered to suspend operations for correction or be subject to its futures trading permit being revoked:
 
(1) guaranteeing profits or failing to present a risk explanation letter to a client;
 
(2) agreeing with a client to share the gains or co-bear the risks in the course of brokering;
 
(3) failing to accept a client's entrustment pursuant to provisions or conducting futures trading arbitrarily in disregard of the contents of the client's entrustment;
 
(4) concealing important matters or using other improper means to induce a client into making a trading order;
 
(5) providing the client with a false transaction slip;
 
(6) failing to transmit a client's order to the futures exchange;
 
(7) misappropriating a client's margin;
 
(8) failing to open margin accounts with banks that safe keep futures' margins pursuant to the provisions or make fund transfers from a client's margin in violation of the provisions; or
 
(9) engaging in any other fraudulent conduct stipulated by the futures supervision and administration department of the State Council.
 
The futures trading company's person-in-charge and other directly accountable personnel involved in any conduct stipulated in the preceding paragraphs shall be subject to disciplinary action and a fine ranging from RMB10,000 to RMB100,000; where the case is serious, the appointment qualifications or futures professional qualifications shall be suspended or revoked.
 
Any entity or individual that fabricates or transmits false information relating to futures trading to disrupt the order of the futures trading market shall be penalized pursuant to the provisions of the first and second paragraph of this Article.
 
Article 72 Futures trading companies, other futures trading entities, settlement members of companies other than futures trading companies and banks that safe keep futures' margins which provide false application documents or conceal important facts by any other fraudulent means to obtain a futures business permit shall be subject to its futures trading permit being revoked and any unlawful gains shall be confiscated.
 
Article 73 Where an insider with access to futures trading insider information or a person obtains futures trading insider information through unlawful means, uses the insider information to conduct futures trading or divulges the insider information to others to conduct futures trading before the announcement of such price sensitive information, any unlawful gains shall be confiscated and a fine ranging from one to five times the amount of unlawful gains shall be imposed; where no unlawful gains exist or the amount of unlawful gains is less than RMB100,000, a fine ranging from RMB100,000 to RMB500,000 shall be imposed. The entity's person-in-charge and other directly accountable personnel engaging in insider trading shall be subject to a warning and a fine ranging from RMB30,000 to RMB300,000.
 
The staff and members of the futures supervision and administration department of the State Council, futures exchanges and agencies that supervise and control the safe keep of futures' margins that engage in insider trading shall be subject to heavier penalties.
 
Article 74 Entities or individuals that manipulate futures trading prices by engaging in any of the following conduct shall be ordered to make correction and any unlawful gains shall be confiscated; a fine ranging from one to five times the amount of unlawful gains shall be imposed; where no unlawful gains exist or the amount of unlawful gains is less than RMB200,000, a fine ranging from RMB200,000 to RMB1 million shall be imposed:
 
(1) manipulate futures trading prices individually or in conspiracy with others, by concentrating dominant funds, positions or information to trade in contracts jointly or continuously;
 
(2) conspire with others to conduct futures trading at a pre-determined timing, price and method to affect the futures trading prices or futures trading volume;
 
(3) trade with itself to affect the futures trading prices or futures trading volume;
 
(4) hoarding commodities to affect the futures market; or
 
(5) any other conduct of futures trading price manipulation stipulated by the futures supervision and administration department of the State Council.
 
The entity's person-in-charge and other directly accountable personnel involved in any of the conduct