Measures for the Supervision and Administration of Futures Companies (2019)

Order of the China Securities Regulatory Commission

(No. 155)

The Measures for the Supervision and Administration of Futures Companies, as deliberated and adopted at the 1st chairman's executive meeting in 2019, are hereby issued, and shall come into force on the date of issuance.

Chairman of the China Securities Regulatory Commission: Yi Huiman

June 4, 2019

Measures for the Supervision and Administration of Futures Companies

Chapter I General Provisions

Article 1 For the purposes of regulating the business activities of futures companies, strengthening the supervision and administration of futures companies, protecting the lawful rights and interests of clients, and advancing the development of the futures market, these Measures are developed in accordance with the Company Law, the Regulation on the Administration of Futures Trading, and other relevant laws and administrative regulations.

Article 2 These Measures shall apply to the futures companies formed within the territory of the People's Republic of China.

Article 3 Futures companies shall abide by laws, administrative regulations and the provisions of the China Securities Regulatory Commission (hereinafter referred to as the “CSRC”), conduct business operations in a prudential manner, prevent conflicts of interest, and fulfill the obligation of good faith to clients.

Article 4 The shareholders, actual controller and other affiliates of a futures company may not abuse their rights, embezzle assets of the futures company or misappropriate client assets, or infringe upon the lawful rights and interests of the futures company or clients.

Article 5 The CSRC and its local offices shall oversee and administer futures companies and their branch offices in accordance with the law.

The China Futures Association and futures exchanges shall conduct self-regulatory administration of futures companies in accordance with self-regulatory rules.

The institutions monitoring the safe custody of margin shall monitor the safety of clients' margin in accordance with the law.

Chapter II Formation, Modification and Business Termination

Article 6 To apply for forming a futures company, the applicant shall meet the following conditions in addition to those set out in Article 16 of the Regulation on the Administration of Futures Trading:

(1) Its registered capital is not less than one million yuan.

(2) It has not less than 15 persons qualified for engaging in the futures business.

(3) It has not less than three senior executives meeting office conditions.

Article 7 Where a major shareholder of a futures company is a legal person or unincorporated organization, it shall meet the following conditions:

(1) None of its paid-in capital and net assets is less than one million yuan.

(2) Its net assets are not less than 50% of its paid-in capital, its contingent liabilities are less than 50% of its net assets, and it has no other risk that has an uncertain significant impact on its financial status.

(3) It has sustainable profitability, has conducted sustainable operation for three or more full accounting years and has made profits in the last three consecutive accounting years.

(4) Its amount of capital contribution shall not exceed its net assets, the source of its funds shall be true and lawful, and it shall not purchase the shares of a futures company using entrusted funds or debt funds, among others.

(5) It has good reputation, standardized corporate governance, clear organizational structure, transparent equity structure and the nature of its main business is relevant to the futures company.

(6) It does not have a comparatively large amount of due debt.

(7) It has not received any administrative or criminal punishment for any major violation of laws and regulations in the last three years.

(8) It is not under case investigation or taken against any compulsory measure by the competent authority for any suspected major violation of laws and regulations.

(9) As a shareholder or the actual controller of a company (including a financial institution), it has not abused shareholders' rights, evaded shareholders' obligations, or committed any other act of bad faith in the last three years.

(10) It does not fall under any other circumstance determined by the CSRC under the principle of prudential supervision as unfit for holding equity in the futures company.

Article 8 Where the major shareholder of a futures company is a natural person, it shall meet the following conditions in addition to the conditions set out in subparagraph (4) and subparagraphs (6) through (10), Article 7 of these Measures:

(1) The personal financial assets are not less than 30 million yuan.

(2) He or she has good reputation, and is not directly liable for any business failure or major violation of laws and regulations of the enterprise invested by it within three years.

A natural person who indirectly holds 5% or more shares of a futures company shall comply with the provisions of the preceding paragraph.

Article 9 The controlling shareholder or largest shareholder of a futures company shall meet the following conditions in addition to the conditions set out in Articles 7 and 8 of these Measures:

(1) Its net capital are not less than five million yuan. If net capital or similar indicators do not apply to shareholder, its net assets are not less than one billion yuan.

(2) It has strong advantages in technical capability, management services, personnel training or marketing channels and other aspects.

(3) It is able to replenish the capital of the futures company continuously, and is able to properly deal with possible risks that the futures company is unable to conduct normal business operation.

(4) Other conditions prescribed by the CSRC under the principle of prudential regulation.

Article 10 Where a non-financial enterprise purchases the shares of a futures company to be the major shareholder, the controlling shareholder or largest shareholder, it shall meet the following conditions in addition to the relevant conditions set out in Articles 7 and 9 of these Measures:

(1) It complies with the relevant provisions of the state on strengthening the regulation of investment in financial institutions by non-financial enterprises and the relevant guiding opinions.

(2) Other conditions prescribed by the CSRC under the principle of prudential regulation.

Article 11 Where a major shareholder, the controlling shareholder or largest shareholder of a futures company is an overseas shareholder, it shall meet the following conditions in addition to those set out in Articles 7 and 9 of these Measures:

(1) It is a legally existed financial institution formed in accordance with the laws of the country or region where it is located.

(2) Its financial indicators and regulatory indicators comply with the provisions of laws of the country or region where it is located and the requirements of the regulatory authority in the last three years.

(3) The country or region where it is located has sound futures laws and regulatory rules, and the futures regulatory authority has signed a regulatory cooperation memorandum and maintained effective regulatory cooperation relationships with the CSRC.

(4) The shareholding or equity ratio of foreign investors in a futures company shall not exceed the commitment made for the opening of the futures industry of China to foreign countries or to the Hong Kong Special Administration Region, Macao Special Administration Region, or Taiwan region of China cumulatively (including direct shareholding and indirect shareholding).

Overseas shareholders shall make capital contributions with freely convertible currencies or legally obtained RMB funds.

(5) Other conditions prescribed by the CSRC under the principle of prudential regulation.

Article 12 Where the total shareholding of affiliated shareholders of a futures company reaches 5%, the shareholder with the largest shareholding ratio shall meet the conditions set out in Articles 7, 8 and 11 of these Measures.

Where the total shareholding of affiliated shareholders with affiliations in a futures company and their persons acting in concert reaches a certain ratio, which enable one of them become the controlling shareholder or largest shareholder of the futures company, the shareholder with the largest shareholding ratio shall meet the conditions set out in Articles 9 and 11 of these Measures. The involved shareholders of a non-financial enterprise shall meet the conditions set out in Articles 10 and 11 of these Measures.

Article 13 To apply for forming a futures company, the applicant shall submit the following application materials to the CSRC:

(1) A written application.

(2) Sponsorship agreement.

(3) The document on the decision made by a non-natural person shareholder approving the capital contribution and formation of the futures company based on its own decision-making procedures.

(4) The draft bylaws of the company.

(5) A business plan.

(6) The list of promoters, their financial reports audited by an accounting firm or proof of personal financial assets in the last three years, and a statement that they are not directly liable for business failure or major violation of laws and regulations of the enterprise invested by them within three years.

(7) The names, resumes, certificates of satisfaction of office qualifications and relevant qualification certificates of the senior executives and employees to be appointed.

(8) The texts of the drafted futures business rules, internal control rules, and risk management rules.

(9) Certification documents on business premise, equipment and source of funds.

(10) An explanation on the equity structure, affiliation among shareholders and relations with the persons acting in concert.

(11) Capital replenishment plan and risk disposal plan.

(12) A legal opinion issued by a law firm.

(13) Other application materials required by the CSRC.

Where the shareholding ratio of a single overseas shareholder of a futures company or the total shareholding ratio of affiliated overseas shareholders reaches 5% or more, the following application materials shall also be submitted:

(1) Photocopies of the bylaws, business license or registration certificate, and relevant business qualification certificate of the overseas shareholder.

(2) A letter of explanation on the overseas shareholder's compliance with conditions set out in subparagraphs (7) and (8) of Article 7 and subparagraph (2) of Article 11 of these Measures, as issued by the competent regulatory authority of the country or region where the overseas shareholder is located or any other overseas institution recognized by the CSRC.

Where a non-financial enterprise is the major shareholder, controlling shareholder or largest shareholder of a non-financial enterprise, it shall submit other materials required in the relevant provisions of the state on strengthening the regulation of the investment in financial institutions by non-financial enterprises and relevant guiding opinions, in addition to the aforesaid materials.

Article 14 A futures company in which foreign investors hold equity shall, in accordance with the provisions of laws and administrative regulations, apply to the commerce department and foreign exchange administrative department of the State Council for undergoing relevant formalities.

Article 15 A futures company formed in accordance with these Measures may engage in the commodity futures brokerage business in accordance with the law. To engage in the financial futures brokerage, overseas futures brokerage, or futures investment consulting business, a futures company shall obtain the corresponding qualification. To engage in the asset management business, a futures company shall undergo registration and recordation formalities in accordance with the law.

Upon approval or recordation, a futures company may engage in other businesses prescribed by the CSRC.

Article 16 To apply for the qualification to engage in the financial futures brokerage business, a futures company shall meet the following conditions:

(1) Its risk regulatory indicators continuously comply with the prescribed standards in the two months prior to the date of application.

(2) It has established and effectively implemented sound corporate governance, risk management rules and internal control rules.

(3) It complies with the provisions of the CSRC on monitoring the safe custody of futures margin.

(4) Its business facilities and technical systems comply with the relevant technical specifications and have good operating status.

(5) In the last two years, none of its senior executives has received any criminal punishment, has received any administrative punishment for any violation of laws and regulations in business operations, has a bad credit record, or is under investigation by the competent authority for any suspected violation of laws and regulations in business operations.

(6) It has not been taken against any regulatory measure set out in paragraph 2 of Article 55 and Article 56 of the Regulation on the Administration of Futures Trading by the CSRC or its local office.

(7) It is not under case investigation by the competent authority for any suspected violation of laws and regulations.

(8) It has not received any criminal or administrative punishment for any violation of laws and regulations in the last two years. However, if the controlling shareholder or actual controller of the futures company changes or more than 50% of the senior executives change, and the senior executive or the person in charge of the business who is liable for the aforesaid circumstances no longer assumes a position in the company, the futures company has completed rectification and passed the compliance inspection of the local CSRC office at the place of its domicile, the company is not required to be subject to such restriction.

(9) Other conditions prescribed by the CSRC under the principle of prudential regulation.

Article 17 A futures company that applies for the qualification to engage in the financial futures brokerage business shall submit the following application materials to the CSRC:

(1) A written application.

(2) Photocopies of its business license and business permit to which its official seal is affixed.

(3) The document on the resolution made by the shareholders' meeting or the board of directors.

(4) The risk regulatory statement for the two months prior to the date of application.

(5) A report on the implementation of corporate governance, risk management rules and internal control rules.

(6) A report on the operation of business facilities and technical systems, the report on the internal audit of information systems, and other materials on network security.

(7) A legal opinion issued by a law firm.

(8) A written opinion on passing the compliance inspection upon rectification issued by the local CSRC office at the place of domicile of the futures company, if it falls under the circumstance set out in subparagraph (8) of Article 16 of these Measures.

(9) Other application materials required by the CSRC.

Article 18 The conditions that shall be met by a futures company to apply for engaging in the overseas futures brokerage, futures investment consulting and other businesses granted approval or recordation shall be prescribed by the CSRC separately.

Article 19 Where a futures company's equity change falls under any of the following circumstances, the equity change shall be subject to the approval by the CSRC:

(1) Change of the controlling shareholder or the largest shareholder.

(2) Increase of the shareholding ratio of a single shareholder or the total shareholding ratio of affiliated shareholders to 5% or more, involving overseas shareholders.

Except for the circumstances set out in the preceding paragraph, the increase of shareholding ratio of a single shareholder of a futures company or the total shareholding ratio of affiliated shareholders to 5% or more shall be subject to the approval by the local CSRC office at the place of domicile of the futures company.

Article 20 Where a futures company's equity change falls under any of the circumstances set out in Article 19 of these Measures, the following conditions shall be met:

(1) The equity to be changed has not been frozen or falls under any other circumstance.

(2) The futures company and its shareholders do not hold shares in each other and the futures company has not provided financial support of any form to the equity transferee.

(3) The shareholders involved meet the conditions set out in Articles 7 through 12 of these Measures.

Article 21 Where a futures company's equity change falls under any of the circumstances set out in Article 19 of these Measures, the futures company shall submit the following application materials:

(1) A written application.

(2) A document on the resolution on equity change.

(3) An equity transfer or capital contribution modification contract, as well as the commitments of other shareholders of the limited liability company on the waiver of their preemptive rights.

(4) A report on the basic information of the shareholder involved, the equity structure chart of shareholders of the futures company after change, and an explanation of the futures company on whether there is any affiliation between shareholders after change and whether the futures company provides financial support of any form to the equity transferee.

(5) A relevant resolution made by the shareholders' meeting, the board of directors or any other decision-making body of the involved shareholder.

(6) The financial reports of involved shareholders audited by an accounting firm or proof of personal financial assets in the last three years, and a statement that they are not directly liable for the business failure or major violation of laws and regulations of the enterprise invested by them within three years.

(7) A legal opinion issued by a law firm.

(8) Other materials required by the CSRC.

Where the shareholding ratio of a single overseas shareholder of a futures company or the total shareholding ratio of affiliated overseas shareholders increases to 5% or more, the following application materials prescribed in paragraph 2 of Article 13 of these Measures shall also be submitted.

Where a non-financial enterprise is the major shareholder, controlling shareholder or largest shareholder of a non-financial enterprise, it shall submit other materials required in the relevant provisions of the state on strengthening the regulation of the investment in financial institutions by non-financial enterprises and relevant guiding opinions, in addition to the aforesaid materials.

Where a futures company has equity change other than the circumstances set out in Article 19 of these Measures, and equity registration is not managed at the securities depository and clearing institution, it shall, within five working days of completing modification registration with the administration for industry and commerce, submit the following written materials to the local CSRC office at the place of its domicile:

(1) A report on change in shareholders holding not more than 5% of equity.

(2) Background information on the equity transferee.

(3) The equity structure chart.

(4) Documents on equity change.

(5) Photocopies of the company's bylaws, document on approving modification registration, and business license.

(6) Other materials required by the CSRC.

Article 22 Shareholders of a futures company shall adhere to the concept of long-term investment, exercise shareholders' rights in accordance with the law, perform shareholders' obligations, and urge the futures company to improve governance structure, risk management and internal control rules, so as to achieve sustainable and sound development.

Article 23 Shareholders that plan to purchase shares of a futures company shall fully understand the conditions for, and rights and obligations of shareholders of the futures company, the procedures for purchasing shares of the futures company shall be complete and lawful, and shall not damage the lawful rights and interests of other shareholders or clients of the futures company or evade the approval or regulation of shareholders' qualifications of the futures company through concealment and other methods.

Article 24 The equity transferor of a futures company shall, during the equity transfer period, support and cooperate with the board of directors, board of supervisors and senior executives of the futures company in performing duties in accordance with the law, and shall not recommend the relevant personnel of the equity transferee to serve as directors, supervisors or senior executives of the futures company prior to the completion of equity transfer.

Where the equity transfer of a shareholder of a futures company shall be subject to approval by the CSRC in accordance with the law, before approval is obtained, the equity transferor shall continue to independently exercise its voting rights and other shareholders' rights, and shall not transfer its voting rights to the equity transferee in any form.

Article 25 Where the legal representative of a futures company is modified, the proposed legal representative shall satisfy the office qualifications. The futures company shall, within five working days of completing the modification registration with the administration for industry and commerce, submit the following recordation materials to the local CSRC office at the place of its domicile:

(1) Recordation report.

(2) A photocopy of the duplicate of the modified business license.

(3) The document on the company's resolution.

(4) The legal representative's certificate of qualification to engage in the futures business and certificate of satisfaction of office qualifications.

(5) The original and duplicate of the former Permit for Engaging in the Futures Business of the futures company.

(6) Other documents required by the CSRC.

Article 26 Where a futures company modifies its domicile or business premises, it shall properly deal with client assets, the new domicile and the facilities to be used shall meet its business needs, and it shall, within five working days of completing the relevant modification registration with the administration for industry and commerce, report to the local CSRC office at the place of its domicile for recordation. To change its domicile to one within the jurisdiction of another local CSRC office, a futures company shall also meet the following conditions:

(1) It complies with the rules for continuous operation.

(2) It has not received any administrative or criminal punishment for any major violation of laws and regulations in the last two years.

(3) Other conditions prescribed by the CSRC under the principle of prudential regulation.

Article 27 Where a futures company modifies its domicile or business premises, it shall submit the following recordation materials to the local CSRC office at the place of its new domicile:

(1) Recordation report.

(2) A photocopy of the duplicate of the modified business license.

(3) The document on the company's resolution.

(4) Information on the handling of client assets and an explanation on its domicile and facilities used after modification meeting the needs of the futures business.

(5) The proof of ownership of or right to use its new domicile.

(6) The opinion of the chief risk officer on the company's satisfaction of the relevant conditions.

(7) The original and duplicate of the former Permit for Engaging in the Futures Business of the futures company.

(8) Other documents required by the CSRC.

The futures company shall, while submitting recordation materials, send a copy thereof to the local CSRC office at the place of its former domicile.

Article 28 A futures company that forms a domestic branch office such as a business department or a branch company shall, within five working days of completing the relevant formation registration with the administration for industry and commerce, report to the local CSRC office at the place of domicile of the company for recordation.

A futures company that forms a domestic branch office shall meet the following conditions:

(1) Its corporate governance is sound, and its internal control rules comply with relevant provisions and have been effectively implemented.

(2) Its risk regulatory indicators comply with the relevant standards in the three months prior to the date of application.

(3) It complies with the provisions of the CSRC on the protection of client assets and monitoring the safe custody of futures margin.

(4) It is not under investigation by the competent authority for any suspected violation of laws and regulations in business operations, and it has not received any administrative or criminal punishment for any violation of laws and regulations in business operations in the last year.

(5) It has a branch office formation plan and stable business plan that meet its business development needs.

(6) Other conditions prescribed by the CSRC under the principle of prudential regulation.

Article 29 A futures company that forms a domestic branch office shall submit the following recordation materials to the local CSRC office at the place of domicile of the company:

(1) Recordation report.

(2) A photocopy of the duplicate of the business license of the branch office.

(3) The document on the company's resolution.

(4) The certificate of satisfaction of office qualifications by the person in charge of the branch office.

(5) The name list of practitioners of the branch office and their certificates of qualification to engage in the futures business.

(6) The proof of ownership of or right to use the business premises.

(7) The opinion of the chief risk officer on the company's satisfaction of the relevant conditions.

(8) Other documents required by the CSRC.

The futures company shall, while submitting recordation materials, send a copy thereof to the local CSRC office at the place where the branch office is to be formed.

Article 30 To change the business premise of a branch office, a futures company shall properly dispose of client assets and ensure that the new business premise and the facilities to be used meet its business development needs.

For the purposes of these Measures, the change of business premise of a branch office of a futures company means the change to a new business premise within the jurisdiction of the same local CSRC office.

Article 31 Where a futures company terminates a domestic branch office, it shall first properly handle the client assets of the branch office, settle the business of the branch office, terminate the operations of the branch office, and within five working days of completing the aforesaid work, submit the following recordation materials to the local CSRC office at the place where the branch office is located:

(1) Recordation report.

(2) A document on the company's resolution.

(3) An explanation on the handling of client assets, settlement of the futures business, and termination of operations of the branch office.

(4) Proof of announcement published on a newspaper or periodical designated by the CSRC.

(5) The opinion of the chief risk officer on the company's satisfaction of the relevant conditions.

(6) The original and duplicate of the Permit for Engaging in the Securities or Futures Business of the branch office of the futures company.

(7) Other documents required by the CSRC.

The futures company shall, while submitting recordation materials, send a copy thereof to the local CSRC office at the place of domicile of the company.

Article 32 A futures company that forms, acquires or purchases non-controlling shares of an overseas trading institution shall meet the following conditions, and report to the CSRC for recordation within five working days after the company's resolution takes effect.

(1) Its risk regulatory indicators comply with the relevant standards in the six months prior to the date of application.

(2) Its latest rating in the categorized supervision of futures companies is not lower than Grade BB, Category B.

(3) It has not received any administrative or criminal punishment for any major violation of laws and regulations in the last three years, has not been taken against any regulatory measure due to unsound governance structure, unsound internal control or any other reason in the last year, and is not under case investigation or rectification for any suspected major violation of laws and regulations.

(4) It has complete rules for the management of overseas institutions and is able to effectively isolate risks.

(5) The futures regulatory authority of the country or region where the institution to be formed, acquired or of which non-controlling shares are purchased is located has signed a regulatory cooperation memorandum with the CSRC.

(6) Other conditions prescribed by the CSRC under the principle of prudential regulation.

Article 33 A futures company that forms, acquires or purchases non-controlling shares of an overseas trading institution shall submit the following recordation materials to the CSRC within five working days after obtaining the confirmation document of the relevant overseas regulatory authority:

(1) Recordation report.

(2) The bylaws of the overseas trading institution.

(3) The confirmation document issued by the relevant overseas regulatory authority.

(4) Other materials required by the CSRC.

Where a futures company modifies the registered capital or equity of an overseas trading institution or terminates an overseas trading institution, it shall submit the following recordation materials to the CSRC within five working days after obtaining the confirmation document of the relevant overseas regulatory authority:

(1) Recordation report.

(2) The financial report of the overseas trading institution in the last year, which is audited by an accounting firm qualified for engaging in the securities or futures-related businesses.

(3) Other materials required by the CSRC.

Article 34 To apply for forming, acquiring or purchasing non-controlling shares of an overseas trading institution, a futures company shall undergo the relevant formalities in accordance with relevant provisions of the foreign exchange administrative department.

Article 35 Where a futures company applies for suspending business operation due to force majeure or any other justified reason, it shall properly dispose of client assets and terminate or transfer its business with clients.

To resume business operation, a futures company shall comply with the rules for the continuous operation of futures companies. Upon expiry of the suspension period, if a futures company fails to resume business operation or comply with the rules for continuous operation, the CSRC may cancel its futures business permit in accordance with the provisions of paragraph 1, Article 20 of the Regulation on the Administration of Futures Trading.

Article 36 Where a futures company suspends its business operation, it shall submit the following application materials to the CSRC:

(1) A written application.

(2) A document on the business suspension resolution.

(3) A report on the disposal of client assets and the disposal or resettlement of clients.

(4) Other materials required by the CSRC.

Article 37 After its futures business permit is canceled, a futures company shall properly dispose of client assets and settle its futures business. If the company survives, it shall undergo the formalities for the modification of name, business scope or company's bylaws, among others, with the administration for industry and commerce in accordance with the law. The surviving company may not continue to provide services in the name of a futures company, and its name may not contain “futures” or a similar word.

Where a futures company is dissolved or bankrupt, it shall firstly properly dispose of client assets and settle its business.

Article 38 In the event of formation, modification, suspension of business operation, dissolution or bankruptcy of a futures company, the cancellation of its futures business permit, or the formation, modification or termination of a branch office, the futures company shall make an announcement on the media designated by the CSRC.

Article 39 The permits for futures companies and their branch offices shall be printed by the CSRC in a centralized manner. If the original or duplicate of a permit is lost or destroyed, the futures company shall publish a statement of invalidation of the permit on the media designated by the CSRC within 30 working days, and apply to the CSRC or the local CSRC office at the place where the branch office of the futures company is located for obtaining a new permit based on the statement.

Chapter III Corporate Governance

Article 40 A futures company shall establish and improve corporate governance under the principles of clarifying duties, intensifying balance and check, and strengthening risk management.

Article 41 A future company and its shareholders, actual controller and other affiliates shall be strictly separated from each other in such aspects as businesses, personnel, assets and finance, conduct independent operations, and conduct independent accounting.

Without a resolution made by the shareholders' meeting or board of directors of a futures company in accordance with the law, the shareholder or actual controller of the futures company may not appoint or remove any director, supervisor or senior executive of the futures company, or illegally interfere with the business management activities of the futures company.

A futures company that provides services for its shareholders, actual controller and the affiliates thereof shall not lower risk management requirements.

Article 42 A futures company shall strengthen the administration of affiliated transactions, accurately identify affiliates, strictly implement the rules for the approval of affiliated transactions and information disclosure, and report the information on affiliated transactions to the local CSRC office at the place of domicile of the company in a timely manner.

The shareholders, actual controller and other affiliates of a futures company shall comply with laws, administrative regulations and the relevant provisions of the CSRC on affiliated transactions, shall not conduct improper affiliated transactions with the futures company, or make use of their influence over the futures company's business management to obtain illicit benefits.

Article 43 The controlling shareholder or largest shareholder of a futures company shall, on an annual basis, conduct self-examination and self-evaluation of its compliance with laws, regulations and regulatory provisions, operating status and performance of undertakings of the futures company and the bylaws of the futures company, and submit the assessment report to the local CSRC office at the place of domicile of the futures company through the futures company within four months after the end of each year.

Article 44 Where a major shareholder or the actual controller of a futures company falls under any of the following circumstances, it shall inform the futures company within three working days in an active, accurate and complete manner.

(1) Its equity in the futures company is frozen or enforced.

(2) It pledges or removes the pledge of its equity in the futures company.

(3) It decides to transfer its equity in the futures company.

(4) It is unable to normally exercise shareholders' rights or undertake shareholders' obligations, which may result in major defects in the governance of the futures company.

(5) Change in equity or material change in business scope or business management.

(6) Any change in the chairman of the board of directors, the general manager, or the director or senior executive performing the corresponding duties on behalf thereof.

(7) Adjustment to laws and regulations of the state or major policies or force majeure and other factors may have material adverse effects on the business management of the company.

(8) It is not under investigation or taken against any compulsory measure by the competent authority for any suspected major violation of laws and regulations.

(9) It receives any administrative or criminal punishment for any major violation of laws and regulations.

(10) Change of name.

(11) Combination, division, or material asset or debt restructuring.

(12) It is ordered to suspend business operation for rectification, administratively dissolved, taken over, taken into custody, or taken against any other regulatory measure, or it enters into dissolution, bankruptcy or closedown procedures.

(13) Any other circumstance that may affect the equity change or continuous operation of the futures company.

Where any major shareholder of a futures company falls under any circumstance set out in the preceding paragraph, the futures company shall file a report with the local CSRC office at the place of its domicile within three working days after being informed of such circumstance.

Where the actual controller of a futures company falls under any of the circumstances set forth in subparagraphs (8) through (12) of paragraph 1, the futures company shall file a report with the CSRC and the local CSRC office at the place of its domicile within three working days after being informed of such circumstance.

Article 45 Where a futures company falls under any of the following circumstances, it shall immediately notify all shareholders in writing or make an announcement, and shall file a report with the local CBRC office at the place of its domicile:

(1) The company or any of its directors, supervisors and senior executives is under case investigation or taken against any compulsory measure by the competent authority for any suspected violation of laws and regulations.

(2) The company or any of its directors, supervisors and senior executives receives any administrative or criminal punishment for any violation of laws and regulations.

(3) Its risk regulatory indicators fail to comply with the prescribed standards.

(4) A client has a serious overdraft or has a floating loss in excess of margin, which may affect the continuous operation of the futures company.

(5) Any unexpected event occurs, which has or may have a significantly adverse impact on the interests of the futures company or its clients.

(6) Any other circumstance that may affect the continuous operation of the futures company.

Where the CSRC or its local office takes any regulatory measure set out in paragraph 2 or 4 of Article 55 or Article 56 of the Regulation on the Administration of Futures Trading against or imposes any administrative punishment on a futures company or its branch office, the futures company shall inform all shareholders in writing or make an announcement.

Article 46 The shareholders' meeting of a futures company shall deliberate and vote on matters within its scope of functions and powers in accordance with the Company Law and the bylaws of the company. The shareholders' meeting shall be convened at least once a year. The shareholders of a futures company shall exercise voting rights in proportion to their respective contributions to the investment or shareholding ratio.

Article 47 A futures company shall set up the board of directors, set up the board of supervisors or appoint supervisors as required by the Company Law, and effectively protect the right of the board of supervisors and supervisors to know the operating status of the company.

The futures company may set up independent directors who may not hold positions other than those of the board of directors in the futures company or have relations with the futures company that may impede them from making independent and objective judgments.

Article 48 A futures company shall set up a chief risk officer to oversee and inspect the legality, compliance and risk management of the business management of the futures company.

Where the chief risk officer discovers any suspected violation of laws and regulations of embezzling or misappropriating the margin of clients or any potential risk, he or she shall immediately file a report with the local CSRC office at the place of its domicile and the board of directors of the company.

The futures company that plans to dismiss its chief risk officer shall have justifiable reasons and file a report with the local CSRC office at the place of its domicile.

Article 49 The chairman of the board of directors, the general manager and the chief risk officer of a futures company shall not be close relatives.

Article 50 A futures company shall reasonably set up business departments and determine their functions, and establish post responsibility rules under which incompatible posts are separated. Trading, settlement and financial affairs shall be handled by different departments and persons.

The futures company shall set up a risk management department or post to manage and control the operating risk of the futures company.

The futures company shall set up a compliance inspection department or post to examine and audit the legality and compliance of business management of the futures company.

Article 51 A futures company shall establish and continuously improve its compliance management, risk management and internal control systems which cover its domestic and overseas branch offices, subsidiaries and their businesses, implement them in all links such as decision-making, implementation, supervision and feedbacks, and achieve full coverage of risk management.

Article 52 A futures company shall subject its branch offices to centralized and unified management, and may not operate or manage its branch offices in the form of equity or cooperative joint venture, or contract, lease or entrust the business management of its branch offices to others.

The businesses operated by the branch offices of a futures company shall not exceed the business scope of the futures company, and shall comply with the provisions of the CSRC on relevant businesses.

The futures company shall subject its branch offices to unified settlement, risk management, funds allocation, financial management, and accounting as required.

Article 53 Where an overseas trading institution formed, acquired, or of which non-controlling shares are held by a futures company has any of the following matters, the futures company shall submit a written report to the local CSRC office at the place of domicile of the company within five working days:

(1) Registration, obtainment of business qualifications, and formation of subsidiaries.

(2) Change in the name or business scope and amendments to important clauses of bylaws, among others.

(3) Obtainment, modification or cancellation of membership of the exchange or association, among others.

(4) Change of the chairman of the board of directors, general manager, chief compliance officer or the person in charge of risk management.

(5) The agency or any of its employees is subject to investigation, taken against any disciplinary action or imposed on any punishment by an overseas regulatory authority or exchange.

(6) Expected major deficit or major loss which exceeds 10% of its net assets.

(7) Significant affiliated transactions with the futures company and its affiliates.

(8) Major matters that shall be reported to the overseas regulatory authority as required.

(9) Other major matters prescribed by the CSRC.

Article 54 A futures company shall submit major financial data and business information of the overseas trading institution formed or acquired by it in the previous month within seven working days after the end of each month.

The futures company shall, within four months after the end of each accounting year, submit the audited financial report, audit report and annual work report of the overseas trading institution in the last year. The content of an annual work report shall include but not be limited to the licensing status, business development status, financial status, affiliated institutions and information on regulatory measures taken or punishment imposed by the overseas regulatory authority.

Article 55 A futures company may use its own funds to invest in such financial assets as stocks, investment funds and bonds, equities related to its businesses, and other businesses prescribed by the CSRC according to relevant provisions, but may not engage in any business prohibited by the Regulation on the Administration of Futures Trading.

Chapter IV Business Rules

Section 1 General Provisions

Article 56 A futures company shall establish and effectively implement risk management, internal control, futures margin depository and other business rules and flow, and effectively isolate the risks associated with different businesses, so as to ensure the safety of client assets and transactions.

Article 57 A futures company shall implement investor suitability management rules as required, establish practice rules and internal accountability mechanism, know clients' economic strength, professional knowledge, investment experiences, risk appetite and other circumstances, prudentially assess the risk tolerance of clients, and provide products or services commensurate with the assessment results.

The futures company shall introduce relevant laws and regulations, business rules, and product or service features to clients in a comprehensive and objective manner, fully disclose risks, provide clients with relevant materials and information as agreed upon in the contract, and may not defraud or mislead clients.

The futures company shall fully understand and assess the risk tolerance of clients and strengthen the management of clients.

The futures company shall undertake the obligation of educating investors on various products and services, guarantee requisite expenses and staffing, and include investor education in all business links.

Article 58 A futures company shall publish its business flow at its website and business premise, among others.

The futures company shall provide the qualification certificates of its employees and other relevant materials for clients to consult and publish a reminder on its website and business premise that clients may consult such materials through the website of the China Futures Association.

Article 59 A futures company shall assume the primary responsibility for handling the complaints of investors, establish and improve the rules for handling clients' complaints, publish the compliant processing flow, and properly settle the complaints filed by clients and disputes with clients.

Article 60 A futures company shall establish data backup rules for the backup management of transactions, settlement, financial and other data.

The futures company shall properly retain clients' account opening information, authorization records, transaction records and all kinds of materials relating to internal management and business operation, no one shall conceal, forge, falsify or destroy them, and shall keep such information confidential, except that they are legally required for investigation and inspection, and shall not provide them to any other person in an illegal manner. Clients' materials shall be retained for not less than 20 years from the date when the account is canceled.

Section 2 Futures Brokerage Business

Article 61 A futures company shall not accept the authorization of the following entities and individuals to conduct futures trading for them:

(1) State organs and public institutions.

(2) The CSRC and its local offices, futures exchanges, institutions monitoring the safe custody of futures margin, and staff members of the China Futures Association and their spouses.

(3) The employees of futures companies and their spouses.

(4) Parties prohibited from access to the securities or futures market.

(5) Entities and individuals that fail to provide materials proving that they have opened accounts.

(6) Other entities and individuals prohibited by the CSRC from engaging in futures trading.

Article 62 Clients shall apply to the futures company for account opening in their own name, issue lawful and valid entity or individual identity certificates or other certification materials, provide the relevant information and materials in a truthful manner, and undertake that the source of funds is lawful. If there are actual control relations between the account to be opened and other accounts, such information shall be disclosed to the futures company at the time of account opening. A futures company shall, in a timely manner, file a report with the futures exchange and the institution monitoring the safe custody of futures margin.

The futures company shall fully inform its clients of the provisions on administration of accounts with actual control relations, and manage the declaration and change of accounts of clients with actual control relations.

Article 63 A futures company shall examine the account opening information and materials of clients. If the account opening information and materials are false, inaccurate or incomplete, the futures company shall not undergo account opening formalities for the client.

Article 64 A futures company shall, before opening a futures brokerage account for a client, present the Futures Trading Risk Statement to the client, and the client shall sign it for confirmation, and enter into a futures brokerage contract.

The Guidelines for Futures Brokerage Contracts and the Statement on Futures Trading Risks shall be developed by the China Futures Association.

Article 65 Clients may place trading orders in writing, via the telephone, using the computer, via the internet, or by other means.

A futures company shall establish rules for the authorized management of trading orders and agree with clients on the authorization methods and procedures. The futures company shall place trading orders according to the authorization of clients, and may not conduct futures trading without the authorization of clients or beyond the scope of authorization of clients. The employees of the futures company may not accept the client's authorization to conduct futures trading in private.

To place a trading order in writing, a client shall fill out a written trading order. If a client places a trading order via the telephone, the futures company shall make audio recordings at the same time. If a client places a trading order using the computer or via the Internet, among others, a futures company shall retain it in an appropriate manner. If a client places a trading order via the Internet, the futures company shall give a special reminder of Internet trading risks.

Article 66 A futures company shall examine clients' trading orders. The futures company shall, before transmitting a trading order, verify the funds and positions in the client's account.

The futures company shall pass clients' trading orders in time sequence.

Article 67 A futures company shall establish and improve the rules for the management of clients' transactions, and if it finds that the client's trading order is suspected of any violation of laws and regulations or the transaction is abnormal, it shall, in a timely manner, file a report with the futures exchange, the institution monitoring the safe custody of futures margin and the local CSRC office at the place of its domicile.

Article 68 A futures company shall provide a trading settlement report for clients after settlement on a daily basis and remind clients that they may consult the settlement results through the institution monitoring the safe custody of futures margin. Clients shall confirm the content of the transaction settlement report in a way as agreed upon in the futures brokerage contract.

A client shall raise an objection, if any, to the transaction settlement report in writing within the time limit agreed upon in the futures brokerage contract, and the futures company shall verify the relevant facts within the specified time. A client's failure to raise an objection within the prescribed time limit shall be deemed as the confirmation of the content of the transaction settlement report.

Article 69 A futures company shall develop and implement business rules for processing wrong orders.

Article 70 A futures company shall apply for and cancel trading codes for clients as required. When the authorization relationship between a client and a futures company is terminated, the relevant account shall be canceled. The futures company may not lend a client's capital account or trading code that has not been canceled to any other person for use.

Article 71 A futures company that provides trading and settlement services for domestic specified futures products to foreign traders and foreign brokerage agencies shall abide by laws, administrative regulations and relevant provisions of the CSRC.

Article 72 A futures company may, as required, authorize any other institution or accept the authorization of any other institution to provide intermediary referral services.

Section 3 Futures Investment Consulting Business

Article 73 A futures company may engage in the futures investment consulting business in accordance with the law, and accept clients' authorization to provide risk management consulting, research and analysis, trading consulting, and other services to clients.

Article 74 A futures company which engages in the futures investment consulting business shall enter into a service contract with the client and specify the service content, charging rates, the methods for settling disputes, and other matters.

Article 75 When engaging in the futures investment consulting business, a futures company or any of its employees may not:

(1) promise to clients that there will be no loss of their asset principal or there will be a minimum return;

(2) provide futures investment consulting services for clients on the basis of false information, market rumors or insider information;

(3) make definitive judgments on price rise or fall or market trend;

(4) seek illicit benefits by offering investment advices to clients;

(5) spread false or misleading information in futures investment consulting activities;

(6) charge service fees in an individual's name; or

(7) commit any other act prohibited by any law, administrative regulation, or the provisions of the CSRC.

Section 4 Asset Management Business

Article 76 A futures company may engage in the asset management business in accordance with the law, and accept clients' authorization to make investment with client assets. The return on investment shall belong to clients and losses shall be borne by clients.

Article 77 A futures company which engages in the asset management business shall enter into an asset management contract with clients and provide services through special accounts.

Article 78 A futures company may provide the following asset management services in accordance with the law:

(1) Providing asset management services for single clients.

(2) Providing asset management services for several specific clients.

Article 79 A futures company or any of its employees which engages in the asset management business shall not:

(1) mislead or induce clients by fraudulent or any other illicit means;

(2) promise to clients that there will be no loss of their asset principal or there will be a minimum return;

(3) accept the client's authorization when the initial assets authorized by the client are less than the minimum amount prescribed by the CSRC;

(4) embezzle or misappropriate the assets authorized by clients;

(5) trade assets between different accounts for the purpose of transferring the profits or losses in the asset management account, which damages the interests of clients;

(6) use client assets for unnecessary transactions for the purpose of gaining commissions or other benefits;

(7) use client assets under the management thereof to seek illicit benefits for a third party or conduct tunneling;

(8) use or assist any client in using the asset management account to evade the provisions of the futures exchange on position limit management;

(9) sell asset management products to investors whose risk tolerance is lower than that of the products by splitting asset management products or other methods in violation of investor suitability requirements;

(10) commit any other act prohibited by any law, administrative regulation, or the provisions of the CSRC.

Article 80 A futures company which engages in the asset management business shall also comply with other provisions of the CSRC on futures companies' asset management business in addition to complying with the provisions of these Measures.

Chapter V Protection of Client Assets

Article 81 The margin of clients and the assets authorized by clients shall be client assets and be owned by clients. Client assets shall be independent from the assets of futures companies for separate management. Client assets may not be seized, frozen, deducted or enforced, except for the client's own debt or any other circumstance prescribed by any law or administrative regulation. When a futures company enters the bankruptcy or liquidation procedure, its client assets shall not belong to bankruptcy or liquidation property.

Article 82 A futures company shall open a futures margin account at a futures margin depository bank.

After opening, modifying or canceling a futures margin account, a futures company shall undergo recordation formalities at the institution monitoring the safe custody of futures margin on the same day and disclose information on the opening, modification or cancellation of the account to the client in a prescribed manner.

Article 83 A client shall register the settlement account opened in his or her own name to deposit and withdraw futures margin with a futures company.

The futures company and the client shall deposit and withdraw margin by transfer under the futures margin account that has been granted recordation and the futures settlement account that has been registered.

Article 84 The clients' margin under the custody of a futures company shall be deposited in the futures margin account and the special settlement account of the futures exchange in full amount, and shall not be deposited in any place other than the futures margin account and the special settlement account of the futures exchange.

Article 85 A futures company shall submit information to the institution monitoring the safe custody of futures margin as required in a timely manner.

Article 86 Where a futures margin depository bank fails to submit information to the institution monitoring the safe custody of futures margin as required, is taken against any self-disciplinary regulatory measure by a futures exchange, or is taken against any regulatory measure or imposed on any administrative punishment by the CSRC, a futures company shall not open a futures margin account with the depository bank for the time being and shall transfer its futures margin to another futures margin depository bank in compliance with relevant provisions.

Article 87 A futures company shall pay settlement guarantees in accordance with the rules of the futures exchange and maintain the minimum amount of settlement reserves and other special funds to ensure that clients are able to conduct normal transactions.

Article 88 Except for the transfer mentioned in Article 28 of the Regulation on the Administration of Futures Trading, no entity or individual may embezzle or misappropriate clients' margin in any form.

Where a client's margin falls short as a result of the client's default in futures trading, the futures company shall make an advance payment with risk reserves and its own funds, and may not use the margin of other clients.

A futures company shall set aside, manage and use risk reserves as required, and may not use them for other purposes.

Chapter VI Information System Management

Article 89 A futures company shall have information systems that comply with industry standards and meet its business development needs, develop information technology management rules, set up an information technology department or post as required, and guarantee the safe operation of information systems.

Article 90 A futures company shall implement compliance and risk management in all links of information technology management, and establish the corresponding examination, testing, monitoring and emergency response mechanisms.

Article 91 Before using the information system to conduct futures business activities, a futures company shall conduct internal examination, verify the following matters and establish archival records:

(1) The function design and technical realization of the information system shall follow the principle of business compliance, and all functions shall comply with laws, administrative regulations and the provisions of the CSRC.

(2) Its risk management system has complete functions, clear powers and is able to operate normally.

(3) The measures for the security protection of the information system shall be able to guarantee the security and completeness of operating data and clients' information.

(4) The operation management ability and information system backup ability of the futures company are able to ensure the safe operation of the information system.

(5) Other matters that may affect the continuity, compliance and security of the operation of the information system.

Article 92 A futures company shall set up a dedicated information system development and testing environment independent of the production environment, and conduct testing before applying the information system to conduct futures business activities.

Article 93 A futures company shall directly accept clients' trading orders through its own information system with the management authority, and shall not allow or cooperate with any other institution or individual to intercept and retain clients' information, or provide clients' information to any other institution or individual in violation of the regulation in any form, unless it is otherwise prescribed by any law, administrative regulation or the provisions of the CSRC.

Where a futures company discovers that any other institution or individual has transmitted, forwarded, stored or used its business data or client information in violation of any provision, it shall file a report with the local CSRC office at the place of domicile of the company, and assess the scope of impact and investigate leak channels. If a business cooperation institution is involved, the futures company shall terminate the cooperation with it immediately.

Article 94 A futures company shall establish and improve its information system security monitoring mechanism, establish monitoring indicators and continuously monitor the operating status of important information systems.

The futures company shall track and monitor abnormal circumstances found, deal with them in a timely manner and conduct assessment and analysis on a periodical basis.

Article 95 A futures company shall establish an emergency response and reporting mechanism for information system security, handle significant abnormal circumstances and emergent information security incidents in a timely manner, resume the normal operation of its information system as soon as possible, and file a report with the CSRC and its local office and the futures exchange.

Article 96 The arrangements on important information systems and the management of data carried by them of a futures company shall comply with laws, regulations and other provisions.

Article 97 A futures company shall establish and improve its management rules for the external access to information systems. If the information system of a futures company is linked to an external information system, the futures company shall conduct compliance assessment, risk assessment and technical system testing of the external information system to which it links so as to ensure the compliance and security of the external information system and report the information of the access party and the information system to which it links according to the requirements of the futures exchange and the China Futures Association, and shall not provide clients with external information system access services in violation of any regulation.

Article 98 A futures company which entrusts an information technology service provider to provide information technology services shall establish internal examination, assessment and management mechanisms. The corresponding liabilities that shall be assumed by the futures company in accordance with the law shall not be exempted or mitigated due to authorization.

Futures information technology service providers shall comply with laws, administrative regulations and the relevant provisions of the CSRC.

Chapter VII Supervision and Administration

Article 99 A futures company shall file annual reports, monthly reports and other materials as required.

The legal representative, the principal person in charge of business management, the chief risk officer, and the chief financial officer of a futures company shall sign their confirmation opinions on the annual report and monthly report. The board of supervisors or supervisors shall examine the annual report and issue a written examination opinion. The directors of the futures company shall sign their confirmation opinions on the annual report.

Persons signing on an annual report or monthly report of a futures company shall undertake the veracity, accuracy and integrity of the content of the report. If the person has any objection to the content of the report, he or she shall indicate the opinion and reason.

Article 100 The CSRC or its local office may require the following institutions or individuals to submit materials on the business operations of a futures company within a specified time limit:

(1) The futures company and its directors, supervisors, senior executives and other employees.

(2) The shareholders, actual controller or other affiliates of the futures company.

(3) An enterprise in which the futures company holds controlling or non-controlling shares or which is actually controlled by the futures company.

(4) The accounting firm, law firm, asset assessment institution and other intermediary service agencies that provide relevant services to the futures company.

The materials or information submitted, provided or disclosed shall be true, accurate and complete and have no false records, misleading statements or material omissions.

Article 101 Where a major shareholder, actual controller or any other affiliate of a futures company conducts futures trading in the futures company, the futures company shall report the account opening information to the local CSRC office at the place of its domicile within five working days after the account is opened and report the trading information on a periodical basis.

Article 102 In the case of any of the following matters, a futures company shall submit a written report to the local CSRC office at the place of its domicile within five working days:

(1) Change in the name, form of organization, or bylaws of the company.

(2) Capital increase or decrease at the same ratio.

(3) Change in equity or registered capital, which does not involve an increase in the number of shareholders holding 5% or more equity.

(4) Change in the person in charge or business premise of a branch office.

(5) Major resolution such as terminating the business.

(6) Being subject to case investigation or taken against any compulsory measure by the competent authority.

(7) Any major event that affects or may affect the business management or financial status of the futures company or the safety of client assets, among others.

(8) Any other matter prescribed by the CSRC.

Where any of the aforesaid matters involves a branch office of the futures company, the futures company shall also submit a written report to the local CSRC office at the place of domicile of the branch office.

Article 103 Where a futures company retains or dismisses an accounting firm, it shall file a report with the local CSRC office at the place of its domicile within five working days from the date when the decision is made. If it dismisses an accounting firm, it shall explain the reasons.

Article 104 A futures company shall, in accordance with relevant provisions, publish its basic information, historical information, basic information on its branch offices, information on its directors, supervisors, senior executives, employees and shareholders, its integrity records, and other information required by the CSRC.

In the case of modification of the information announced by a futures company or any other major matter, it shall be updated in the relevant regulatory information system of the CSRC within five working days from the date of modification.

Article 105 The CSRC may conduct categorized supervision of futures companies according to relevant provisions.北大法宝

Article 106 The CSRC and its local offices may conduct on-site inspections of futures companies and their branch offices on a periodical basis or from time to time.

When the CSRC or its local office conducts an on-site inspection in accordance with the law, it shall assign at least two inspectors who shall produce legal certificates and an inspection notice, and may retain external professionals to assist in inspection when necessary.

The CSRC and its local offices may conduct extended inspections of the subsidiaries and shareholders or the actual controller of a futures company.

Article 107 When inspecting a futures company and its branch offices, the CSRC and its local offices shall have the right to take the following measures:

(1) Inquiring of employees of the futures company and its branch offices and requiring them to make interpretations and explanations on the matters under inspection.

(2) Consulting or copying documents or materials relating to the matters under inspection.

(3) Having access to the asset accounts of clients of both the futures company and its branch offices.

(4) Inspecting the information systems of the futures company and its branch offices and consulting their trading, settlement and financial data.

Article 108 Where the CSRC or its local office is of the opinion that a futures company may fall under any of the following circumstances, it may require the company to retain an intermediary service agency to conduct a special-purpose audit or assessment or issue a legal opinion:

(1) There are any false records, misleading statements or material omissions in an annual report, monthly report or interim report of the futures company.

(2) There is any violation of the provisions on the protection of client assets or monitoring the safe custody of futures margin or the management of risk regulatory indicators.

(3) Other circumstances determined by the CSRC under the principle of prudential regulation.

The futures company shall cooperate in the work of the intermediary service agency.

Article 109 Where a futures company or its branch office, the liable director, supervisor, senior executive of the futures company or any other directly liable person violates the relevant provisions of these Measures, the CSRC or its local office may take regulatory measures such as holding a regulatory talk, ordering corrective action and issuing a warning letter.

Article 110 Where a futures company or its branch office falls under any of the following circumstances, the CSRC or its local office may take regulatory measures in accordance with the provision of Article 55 of the Regulation on the Administration of Futures Trading:

(1) The corporate governance is unsound, the department or position setup has relatively large defects, any key business post is vacant, or any person holding a key business post fails to perform duties, which may affect the continuous operation of the futures company.

(2) The business rules are not sound or not effectively implemented, the risk management or internal control, among others, has relatively large defects, or the business management is disordered, which may affect the continuous operation of the futures company or damage the lawful rights and interests of clients.

(3) It fails to comply with the provisions on the protection of client assets or monitoring the safe custody of futures margin, which may affect the safety of client assets.

(4) It fails to implement the rules for the unified management of branch offices as required and has relatively large risks or potential risks in business management.

(5) It fails to implement investor suitability management rules as required and has relatively large risks or potential risks.

(6) It fails to authorize any other person to or accept authorization to provide intermediary referral services as required.

(7) Its trading, settlement or financial information system has major defects, which may result in the distortion of data or damage the lawful rights and interests of clients.

(8) Its information system fails to comply with relevant provisions or it fails to conduct information system management according to prescribed requirements, which has relatively large risks or potential risks.

(9) It conducts affiliated transactions in violation of any provision, which may affect continuous operation.

(10) It fails to have external access to the information system as required, which has relatively large risks or potential risks.

(11) It fails to allocate and use its own funds as required, resulting in major risks or potential risks.

(12) It fails to provide asset management services as required, which has relatively large risks or potential risks.

(13) It forms, acquires or purchases non-controlling shares of an overseas trading institution in non-compliance with the relevant provisions of these Measures, which has relatively large risks or potential risks.

(14) It fails to perform the responsibility for managing an overseas trading institution as required, resulting in non-compliance or relatively large risks in the operation of the overseas trading institution.

(15) A shareholder, the actual controller or any other affiliate suspends business operation, has major risk, or is suspected of any major violation of laws and regulations, which may affect the governance or continuous operation of the futures company.

(16) It has any major dispute, arbitration or litigation, which may affect its continuous operation.

(17) It fails to submit or disclose information as required, or the submitted or disclosed information has any false records, misleading statements or material omissions.

(18) Any other circumstance under which it fails to comply with the provisions of continuous operation rules or has any other operating risk.

Where a branch office still fails to meet the operating conditions after rectification, the local CSRC office shall have the authority to close it down in accordance with the law.

Article 111 Where a shareholder, the actual controller or any other affiliate of a futures company, or the accounting firm, law firm or asset appraisal institution or any other intermediary service agency that provides relevant services for the futures company violates the provisions of these Measures, the CSRC or its local office may take such regulatory measures as holding a regulatory interview, ordering it to take corrective action and issuing a warning letter against the violator.

Article 112 Where a shareholder, the actual controller or any other affiliate of a futures company falls under any of the following circumstances, the CSRC or its local office may order it to make rectification within a prescribed time limit:

(1) Making false or insufficient capital contribution or withdrawing capital contribution.

(2) Illegally using entrusted funds or debt funds to make investment and purchase shares.

(3) Where relevant personnel of the equity transferee are recommended to serve as the director, supervisor or senior executive of the futures company before equity transfer is completed, or equity transfer shall be subject to the approval of the CSRC in accordance with the law, the voting rights of such personnel shall be transferred or transferred in a disguised form to the equity transferee before approval is obtained.

(4) Embezzling assets of the futures company.

(5) Directly appointing or removing any director, supervisor or senior executive of the futures company, or illegally interfering with the business management activities of the futures company.

(6) A shareholder fails to exercise voting rights according to its capital contribution ratio or shareholding ratio.

(7) The submitted, provided or issued materials, information or report has any false records, misleading statements or material omissions.

(8) Conducting affiliated transactions in violation of any provision.

(9) Rejecting or obstructing the investigation and verification by the CSRC or its local office.

(10) Failing to cooperate with the CSRC or its local office in risk disposal.

(11) Any other conduct that damages the lawful interests of the futures company and its clients and disrupts the order of the futures market.

Where the aforesaid circumstance results in the futures company's failure to comply with the continuous operation rules or operating risk, the CSRC or its local office may order the controlling shareholder to transfer equity or restrict the relevant shareholder's exercise of shareholders' rights in accordance with the provision of Article 55 of the Regulation on the Administration of Futures Trading.

Article 113 Where any individual or entity or any affiliate thereof holds 5% or more equity of a futures company without the approval of the CSRC or its local office, or becomes a shareholder of a futures company by providing false application materials or any other means, the CSRC or its local office may order it to transfer the equity within a prescribed time limit. The equity carries no right to vote or receive dividends before it is transferred.

Chapter VIII Legal Liability

Article 114 Where a futures company or its branch office accepts the authorization of an entity or individual that fails to undergo account opening formalities, or lends the client's fund account or trading code to any other entity or individual for use, it shall be given a warning and given a fine of not more than 30,000 yuan.

Article 115 Where a futures company or its branch office commits any of the following conduct, it shall be punished in accordance with Article 66 of the Regulation on the Administration of Futures Trading:

(1) It fails to implement investor suitability management rules as required, which damages clients' lawful rights and interests.

(2) It fails to separate client assets from the futures company's own assets for management as required.

(3) It deposits clients' margin other than the futures margin account and the special settlement account of the futures exchange.

(4) It embezzles clients' margin.

(5) The information submitted to the institution monitoring the safe custody of futures margin has any false records, misleading statements or material omissions.

(6) It violates the provisions on the administration of monitoring the safe custody of futures margin, which damages the lawful rights and interests of clients.

(7) It fails to pay settlement guarantee as required, or fails to maintain the minimum amount of settlement reserves or any other special-purpose fund.

(8) It fails to verify the funds in a client's account and the positions held thereby before transmitting the client's trading order.

(9) It violates the provisions of the CSRC on the administration of the settlement business, which damages the lawful rights and interests of any other futures company and its clients.

(10) The information system fails to comply with the relevant provisions or the futures company fails to manage the information system according to the relevant requirements, which damages the lawful rights and interests of clients or disrupts the order of the futures market.

(11) It fails to have external access to the information system as required, which damages the lawful rights and interests of clients or disrupts the order of the futures market.

(12) It violates the provisions of the CSRC on risk regulatory indicators.

(13) It engages in the futures investment consulting or asset management business in violation of any provision, and the circumstances are serious.

(14) It forms, acquires or purchases non-controlling shares of an overseas trading institution in noncompliance with the relevant provisions of these Measures, the circumstances are serious or there are severe consequences.

(15) It fails to perform the responsibility to manage an overseas trading institution as required, resulting in illegal operation or major risks of the overseas trading institution.

(16) It authorizes any other institution, or accepts the authorization of any other institution to provide intermediary referral services in violation of relevant provisions, which damages the lawful rights and interests of clients.

(17) It conducts affiliated transactions in violation of any provision, and the circumstances are serious.

(18) It lowers the risk management requirements applicable to shareholders, the actual controller and their affiliates, which damages the lawful rights and interests of other clients.

(19) It forms a branch office in the manner of joint venture, cooperation or joint operation, or contracts out or leases a branch office to any other person, or violates the provisions on the centralized and unified management of branch offices.

(20) It refuses to cooperate with, obstructs or disrupts the supervision and administration of the CSRC or its local office.

(21) It violates the provisions on the administration of futures investor protection fund.

Article 116 Where a futures company or its branch office falls under any of the following circumstances, it shall be punished in accordance with Article 67 of the Regulation on the Administration of Futures Trading:

(1) It releases any false advertisement or conducts false publicity to induce the client to participate in futures transactions.

(2) It fails to modify or cancel the futures margin account in accordance with the relevant provisions, or fails to disclose the information on futures margin account to clients according to prescribed methods.

Article 117 Where a futures company fails to perform the duties of managing subsidiaries according to relevant provisions due to the unsound governance structure and unsound internal control, leading to illegal operation or major risks of the subsidiaries, the futures company and its directly responsible directors, supervisors, senior executives and other directly liable persons shall be punished in accordance with Article 66 of the Regulation on the Administration of Futures Trading.

Article 118 Where an accounting firm, law firm, asset appraisal institution or any other intermediary service provider fails to fulfill its reporting obligations as required, or the provided or issued materials, reports or opinions are incomplete, it shall be ordered to take corrective action, its business income shall be confiscated, and it shall be given a fine of not more than 30,000 yuan. The directly responsible person in charge and other liable persons shall be given a warning and given a fine of not more than 30,000 yuan.

Article 119 Where any individual or entity or any affiliate thereof holds 5% or more equity of a futures company without the approval of the CSRC or its local office, or becomes a shareholder of a futures company by providing false application materials or any other means, and the circumstances are serious, it shall be given a warning and given a fine of not more than 30,000 yuan.

Article 120 Where a shareholder, the actual controller or any other affiliate of a futures company falls under any of the following circumstances, unless it is otherwise prescribed by any law or administrative regulation, a warning shall be given, and a fine of not more than 30,000 yuan shall be given. The directly responsible person in charge and other directly liable persons shall be given a warning and given a fine of not more than 30,000 yuan.

(1) Illegally using entrusted funds or debt funds to invest in the commercial bank in violation of any regulation, and the circumstances are serious.

(2) The relevant personnel of the equity transferee are recommended to serve as the director, supervisor or senior executive of the futures company before equity transfer is completed in the course of equity transfer, or the equity transfer shall be subject to the approval of the CSRC in accordance with the law, the voting rights of such personnel shall be transferred or transferred in a disguised form to the equity transferee before approval is obtained, and the circumstances are serious.

(3) Embezzling assets of the futures company.

(4) Directly appointing or removing the director, supervisor or senior executive of the futures company, or illegally interferes with the business management activities of the futures company and the circumstances are serious.

(5) The shareholder fails to exercise voting rights in proportion to its contribution to the investment or shareholding ratio, and the circumstances are serious.

(6) Conducting affiliated transactions in violation of any provision, and the circumstances are serious.

(7) Any other act that damages the lawful interests of the futures company and its clients and seriously disrupts the order of the futures market.

Chapter V Supplementary Provisions

Article 121 With the approval of the CSRC, other futures trading institutions may engage in specific futures business. The specific measures shall be developed by the CSRC separately.

Article 122 A futures company participating in trading at any other trading venue shall abide by laws, administrative regulations, the provisions of the CSRC and the business rules of other trading venues.

Article 123 The following terms in these Measures shall have the following meanings:

(1) “Major shareholders of a futures company” means legal persons, unincorporated organizations or natural persons holding 5% or more equities of a futures company.

(2) “External access to information system” means the clients' trading system that has access to the trading information system of the futures company by means of the interface of the futures company's trading information system or other information technology means, and of which the futures company does not have the management authority.

Article 124 For the purposes of these Measures, “financial assets” include bank deposits, stocks, bonds, fund shares, asset management plans, banks' wealth management products, trust plans, insurance products, and futures rights and interests, among others.

Article 125 These Measures shall come into force on the date of issuance. The Measures for the Supervision and Administration of Futures Companies (Order No. 110, CSRC) issued on October 29, 2014 shall be repealed concurrently.

Chinese Link:

期货公司监督管理办法

http://www.csrc.gov.cn/pub/newsite/flb/flfg/bmgz/qhl/201906/t20190627_358167.html