期货交易管理暂行条例 State Council, Administration of Futures Trading Tentative Regulations

>　　2. the shareholders' meeting decides on dissolution;

　　3. there is a merger or division necessitating its dissolution;

　　4. bankruptcy: or

　　5. the CSRC decides to close it.

　　Dissolution of a futures brokerage pursuant to items (1), (2) or (3) of the paragraph above shall be examined and approved by the CSRC.

　　If a futures brokerage is dissolved, it shall carry out de-registration with the State Administration for Industry and Commerce.

　　PART FOUR　BASIC RULES OF FUTURES TRADING

　　Article 28　A person conducting futures trading in a futures exchange must be a member of that exchange. Members which are futures brokerages may only engage in futures brokerage business upon the commission of a client and members which are not futures brokerages may only engage in the brokerage business for their own account.

　　A futures exchange member shall appoint floor representatives to conduct futures trading on the trading floor. A floor representative may only accept trade orders from his member unit and may not accept trade orders from other units or individuals or provide them with advisory opinions, and may not conduct futures trading for himself.

　　Article 29　When a futures brokerage accepts a commission to conduct futures trading for a client, it shall first provide an explanation of the risks and after the client signs in acknowledgment, the brokerage shall execute a written contract with the client.

　　A futures brokerage may not give clients a guarantee of profits or agree with the client to share the profits or the risks, may not accept a commission from a company, enterprise or other economic organization to conduct futures trading in the name of an individual and may not assign commissioned business or accept such assigned business.

　　Article 30　The following units and individuals may not engage in futures trading and futures brokerages may not accept their commissions and conduct futures trading for them:

　　1. financial institutions, public institutions and State authorities;

　　2. working personnel of the CSRC;

　　3. persons prohibited from entering the futures market;

　　4. units unable to produce bank account documentation; and

　　5. other units and individuals which the CSRC stipulates may not engage in futures trading.

　　Article 31　Clients may transmit their trade orders to a brokerage in writing, by telephone or by other means stipulated by the CSRC.

　　A client's trade order shall be clear and comprehensive.

　　Article 32　A futures brokerage shall conduct a futures trade on the basis of the client's trade order. A futures brokerage may not conduct a futures trade without a commission from the client or by not complying with the scope of the client's commission.

　　Article 33　Futures market quotations provided by a futures brokerage to a client shall be true and accurate and the brokerage may not conceal important matters or use other improper means to induce a client to issue a trade order.

　　Article 34　A futures exchange shall timely publish the trading volume, trading price, position, ceiling price and floor price, opening price and closing price of listed commodities futures contracts and other information that should be published, and it shall ensure that such information is true and accurate. A futures exchange may not publish information on price predictions.

　　Article 35　In accordance with the relevant State regulations, a futures exchange shall establish the following sound risk management systems:

　　1. a security deposit system;

　　2. a daily settlement system;

　　3. a fluctuation band trading suspension system;

　　4. a position limit and large account position reporting system;

　　5. a risk reserve system; and

　　6. other risk management systems stipulated by the CSRC.

　　Article 36　A security deposit system shall be strictly implemented for futures trading. The security deposits collected by a futures exchange from its members and by a futures brokerage from its clients may not be lower than the standard set by the CSRC, and must be kept separate from the exchange's or the brokerage's own funds and deposited in a dedicated account.

　　The security deposit collected from members by the futures exchange shall belong to the members, and, aside from using it to settle the members' trades, a futures exchange is strictly prohibited from diverting it for other uses.

　　The security deposit collected from clients by a futures brokerage shall belong to the clients, and, aside from depositing it for the client as a security deposit with the futures exchange in accordance with the regulations of the CSRC and using it to settle clients' trades, a futures brokerage is strictly prohibited form diverting it for other uses.

　　A futures brokerage shall open an independent dedicated account for, and assign a trading code to, each client, and may not conduct mixed code trading.

　　Article 37　Futures exchanges and futures brokerages shall allocate funds for, manage and use its risk reserve fund in accordance with the regulations of the CSRC and the Ministry of Finance, and may not divert it for other uses.

　　Article 38　The collection of handling fees from members by a futures exchange and from clients by a futures brokerage shall be conducted in accordance with the unified regulations of the relevant State Council authorities.

　　Article 39　Futures trading shall implement centralized competitive pricing to be conducted in keeping with the principles of brokering transactions on the basis of price priority and time priority.

　　Article 40　The settlement of futures trades shall be organized and conducted centrally by the futures exchange.

　　Futures exchanges shall implement a daily settlement system. Upon daily market closing, the futures exchange shall promptly notify members of the settlement results.

　　A futures brokerage shall conduct settlement for clients on the basis of the futures exchange's settlement results and promptly

notify clients of the settlement results.

　　Article 41　When a futures exchange member's security deposit is insufficient it must supplement its deposit. If the member fails to supplement its deposit within the time period centrally mandated by the futures exchange, the futures exchange shall forcibly close the member's futures contracts and the charges related to and the losses incurred from the forced closure shall be borne by the member.

　　When a client's security deposit is insufficient and the client fails to promptly supplement it within the time period centrally mandated by the futures brokerage, the futures brokerage shall forcibly close the client's futures contracts and the charges related to and the losses incurred from the forced closure shall be borne by the client.

　　Article 42　The delivery of futures trades shall be organized and conducted centrally by the futures exchange. The futures exchange may not limit the total volume of physical goods delivered.

　　The delivery warehouse shall be designated by the futures exchange. The futures exchange shall execute an agreement with the delivery warehouse specifying the rights and obligations of both parties.

　　Article 43　A delivery warehouse may not:

　　1. issue fraudulent warehouse receipts;

　　2. breach the futures exchange's operational rules, restrict the entry into and exit from the warehouse of delivered commodities;

　　3. disclose futures trading related commercial secrets;

　　4. participate in futures trading; or

　　5. be involved in other acts stipulated by the CSRC.

　　Article 44　If a member commits a breach in its futures trading, its liability for breach of contract shall first be compensated from its security deposit. If the security deposit is insufficient, the futures exchange shall use its risk reserve fund and its own funds to assume liability for the member and by so doing the futures exchange shall obtain the right to pursue equivalent compensation from the member.

　　If a client commits a breach in its futures trading, the futures brokerage shall handle it by referring to the provisions of the preceding paragraph.

　　Article 45　Futures exchanges and futures brokerages shall ensure the completeness and safety of futures trading, settlement and delivery documentation.

　　Article 46　No unit or individual may fabricate or spread futures trading related rumours, collude in bad faith, carry out joint purchases and sales or use any other means to manipulate futures trading prices.

　　Article 47　No unit or individual may use loan funds or public finance funds to conduct futures trading.

　　Financial institutions may not provide financing or security for futures trading.

　　Article 48　When a State-owned enterprise or an enterprise in which State-owned assets have a controlling or dominant position conducts futures trading, it is limited to engaging in hedging business and it shall comply with the following stipulations:

　　1. the commodities in which it conducts futures trading shall be limited to those which it produces and deals with, or raw materials which it needs for production;

　　2. its total futures trading volume shall correspond to its total spot trading volume for the same period; and

　　3. other stipulations of the CSRC.

　　Enterprises mentioned in the preceding paragraph which engage in hedging business shall present a document signed by their legal representative to the futures exchange or the futures

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