Futures and Derivatives Law of the People's Republic of China
Futures and Derivatives Law of the People's Republic of China
Futures and Derivatives Law of the People's Republic of China
Order of the President of the People's Republic of China No.111
April 20, 2022
The Futures and Derivatives Law of the People's Republic of China, which was adopted at the 34th meeting of the Standing Committee of the 13th National People's Congress of the People's Republic of China on April 20, 2022, is hereby promulgated for implementation as of August 1, 2022.
Xi Jinping, President of the People's Republic of China
Futures and Derivatives Law of the People's Republic of China
(Adopted at the 34th meeting of the Standing Committee of the 13th National People's Congress on April 20, 2022)
Contents
Chapter I General Provisions
Chapter II Trading of Futures and Derivatives
Section 1 General Rules
Section 2 Futures Trading
Section 3 Derivatives Trading
Chapter III Futures Clearing and Delivery
Chapter IV Futures Traders
Chapter V Futures Operators
Chapter VI Futures Trading Venues
Chapter VII Futures Clearing Institutions
Chapter VIII Futures Service Providers
Chapter IX Futures Industry Associations
Chapter X Supervision and Regulation
Chapter XI Cross-border Trading and Regulatory Cooperation
Chapter XII Legal Liability
Chapter XIII Supplementary Provisions
Chapter I General Provisions
Article 1 The Futures and Derivatives Law of the People's Republic of China (hereinafter referred to as the "Law") is formulated in order to regulate the trading of futures and derivatives, safeguard the legitimate rights and interests of all parties, maintain market order and public interests, promote the services of futures and derivatives markets for the national economy, prevent and resolve financial risks, and safeguard national economic security.
Article 2 The Law shall apply to the trading of futures and derivatives and related activities within the territory of the People's Republic of China.
Any trading of futures and derivatives and related activities outside the People's Republic of China that disrupt the domestic market order in the People's Republic of China and damage the legitimate rights and interests of domestic traders shall be handled and investigated for legal liability in accordance with the relevant provisions of the Law.
Article 3 For the purpose of the Law, "futures trading" refers to the trading of futures contracts or standardized options contracts.
For the purpose of the Law, "derivatives trading" refers to the trading of swap contracts, forward contracts, and non-standardized options contracts or a combination thereof other than futures trading.
For the purpose of the Law, "futures contract" refers to a standardized contract uniformly formulated by a futures trading venue for the delivery of a certain quantity of the underlying asset on a specified date and at a specified place in the future.
For the purpose of the Law, "options contract" refers to a standardized or non-standardized contract whereby the buyer has the right to buy or sell an agreed-upon underlying asset (including a futures contract) at a predetermined price on a specified date in the future.
For the purpose of the Law, "swap contract" refers to a financial contract for the exchange of a certain underlying asset within a specified time limit in the future.
For the purpose of the Law, "forward contract" refers to a financial contract for the delivery of a certain quantity of the underlying asset on a specified date and at a specified place in the future other than futures contracts.
Article 4 The State supports the healthy development of the futures market and gives play to the functions of the futures market in discovering prices, managing risks, and allocating resources.
The State encourages the use of futures and derivatives markets to engage in risk management activities including hedging.
The State takes measures to promote the development of the futures and derivatives markets of agricultural products and to guide the production and operation of domestic agricultural products.
For the purpose of the Law, "hedging" refers to the trading by traders of futures and derivatives which are basically consistent with their assets and liabilities, among others, to manage the risks arising from changes in value of the aforesaid assets and liabilities, among others.
Article 5 Futures and derivatives markets shall establish and improve a system or mechanism for monitoring, controlling, solving, and disposing of risks to restrict excessive speculation in accordance with the law and prevent systematic market risks.
Article 6 The trading of futures and derivatives shall conform to laws, administrative regulations, and the relevant provisions of the State and follow the principles of openness, fairness, and justice; and fraud, market manipulation, and insider trading shall be forbidden.
Article 7 The parties involved in the trading of futures and derivatives are legally equal and shall abide by the principles of voluntary participation, valuable consideration, and good faith.
Article 8 The futures regulatory authority under the State Council implements centralized and unified supervision and regulation of the futures market nationwide in accordance with the law. Where the supervision and regulation of interest rate and exchange rate futures is otherwise provided for by the State Council, such provision shall prevail.
The derivative market shall be subject to the supervision and regulation by the futures regulatory authority under the State Council or the department authorized by the State Council as per the division of duties.
Article 9 Futures and derivatives industry associations shall implement self-discipline management in accordance with the law.
Article 10 The audit authority of the State shall audit and supervise futures operators, futures trading venues, futures clearing institutions, and the futures regulatory authority under the State Council in accordance with the law.
Chapter II Trading of Futures and Derivatives
Section 1 General Rules
Article 11 Futures trading shall be conducted in a futures exchange established in accordance with the law or any other futures trading venue approved by the futures regulatory authority of the State Council in accordance with the law to carry out futures trading (hereinafter collectively referred to as the "futures trading venue") in an open, centralized manner or any other manner approved by the futures regulatory authority under the State Council.
No futures trading may be conducted outside futures trading venues.
Derivatives trading may be conducted by means of an agreement or any other means prescribed by the State Council.
Article 12 No entity or individual may manipulate the futures or derivatives market.
It is forbidden to manipulate the futures market by any of the following means to influence or attempt to influence the futures trading prices or volumes:
1. independently or in collusion with others, pooling any funding or position advantage or taking advantage of information to purchase or sell contracts jointly or successively;
2. colluding with any other person to conduct futures trading at such time and price and in such manner as agreed upon in advance;
3. effecting any futures trading between accounts actually controlled by the entity or individual;
4. using false or uncertain material information to induce traders to conduct futures trading;
5. lodging and canceling declarations, frequently or in a large amount, not for the purpose of concluding transactions;
6. making public evaluations, predictions or public investment recommendations for the relevant futures trading or the trading of the underlying assets of contracts, and conducting reverse or related operation;
7. forestalling physical goods to influence the quotations of the futures market;
8. circumventing the position limit by improper means and forming position advantages in the delivery month or nearby delivery month;
9. manipulating the futures market by using activities in the relevant markets; and
10. any other means that manipulate the futures market.
Article 13 No insider who has access to any insider information on futures or derivatives trading or any person who has unlawfully obtained any insider information may, before such information is in the public domain, engage in the relevant futures or derivatives trading, explicitly or implicitly instruct others to engage in futures or derivatives trading related to such information, or divulge such information.
Article 14 For the purpose of the Law, "insider information" refers to undisclosed information which may have a significant effect on futures or derivatives trading prices.
Insider information on futures trading shall include:
1. policies, information, or data that are being formulated but have not been issued by the futures regulatory authority under the State Council and other relevant departments and may have a significant effect on futures trading prices;
2. decisions that are made by a futures trading venue or futures clearing institution and may have a significant effect on futures trading prices;
3. funds and trading trends of members of a futures trading venue and traders;
4. information on major abnormal transactions in the relevant markets; and
5. other information that has a significant effect on futures trading prices as prescribed by the futures regulatory authority under the State Council.
Article 15 For the purpose of the Law, "insider" refers to an entity or individual who, by virtue of his/her/its operating, administrative, or supervisory position or advantages in position, among others, has access to or obtains insider information.
Insiders with knowledge of insider information on futures trading shall include:
1. the relevant personnel of futures operators, futures trading venues, futures clearing institutions, and futures service providers;
2. functionaries of the futures regulatory authority under the State Council and other relevant departments; and
3. other entities and individuals who may obtain insider information as prescribed by the futures regulatory authority under the State Council.
Article 16 Entities and individuals are prohibited from fabricating or disseminating any false or misleading information to disrupt futures and derivatives markets.
Futures operators, futures trading venues, futures clearing institutions, and futures service providers and their practitioners, venues and institutions that organize or conduct derivatives trading and their practitioners, futures and derivatives industry associations, the futures regulatory authority under the State Council, and the department authorized by the State Council and their functionaries are prohibited from making any false statement or disseminating any misleading information in the trading of futures and derivatives and related activities.
Futures and derivatives market information disseminated by various types of mass media shall be authentic and objective and shall not be misleading. The mass media and their staff engaged in the reporting of futures and derivatives market information shall not engage in the trading of futures and derivatives and related activities that conflict with their job duties.
Section 2 Futures Trading
Article 17 The listing of futures contract products and standardized options contract products shall comply with the provisions of the futures regulatory authority under the State Council and be reported by futures trading venues in accordance with the law to the futures regulatory authority under the State Council for registration.
The suspension and resumption of listing and delisting of futures contract products and standardized options contract products shall comply with the provisions of the futures regulatory authority under the State Council, be decided by futures trading venues, and reported to the futures regulatory authority under the State Council for the record.
Futures contract products and standardized options contract products shall be of economic value and difficult to manipulate, and conform to public interests.
Article 18 Accounts for futures trading shall be subject to the real-name system. A trader who intends to conduct futures trading shall hold documentary proof of his/her/its identity to apply for opening an account in his/her/its name.
No entity or individual may, in violation of the provisions, lend its/his/her own futures account or borrow any other's futures account for futures trading.
Article 19 Whoever conducts futures trading at a futures trading venue shall be a member of the futures trading venue or any other participant in compliance with the provisions of the futures regulatory authority under the State Council.
Article 20 Traders who entrust futures operators with the trading may give trading instructions in writing, by telephone or self-access terminals, via the internet, or otherwise. The trading instructions shall be clear, specific, and complete.
Article 21 Where a programmatic transaction is automatically generated through a computer program or the issuance of a trading instruction, it shall comply with the provisions of the futures regulatory authority under the State Council and be reported to the relevant futures trading venue, and shall not affect the system security or the normal trading order of such futures trading venue.
Article 22 Futures trading shall be subject to the margin system. Futures clearing institutions shall collect margin from clearing participants, who shall collect margin from traders. The margin shall be used for clearing and performance guarantees.
The forms of margin shall include cash, treasury bonds, stocks, fund shares, standard warrants, and other highly liquid marketable securities, and other property prescribed by the futures regulatory authority under the State Council. Marketable securities, among others, may be used as margin by pledge or other forms with the performance guarantee function in accordance with the law.
A futures clearing institution or clearing participant shall collect margin in such manner and at such ratio as prescribed by the futures regulatory authority under the State Council.
In the trading of a standardized options contract between traders, the seller shall pay margin and the buyer shall pay a premium.
For the purpose of the preceding paragraph, "premium" refers to funds paid by the buyer to purchase a standardized options contract.
Article 23 Futures trading shall be subject to the position limit system to prevent the risk of excessive positions in a contract.
Whoever engages in hedging and other risk management activities may apply for exemption from the position limit.
Administrative measures for position limits and hedging shall be formulated by the futures regulatory authority under the State Council.
Article 24 The actual control relations between traders in futures trading shall be reported for the record. Traders shall report actual control relations to futures operators or futures trading venues for the record in accordance with the provisions of the futures regulatory authority under the State Council.
Article 25 The charges for futures trading shall be reasonable. Charging items and standards and administrative measures shall be publicized.
Article 26 No results of transactions conducted in accordance with the business rules formulated by futures trading venues in accordance with the law may be amended, except as prescribed in Paragraph 2 of Article 89 of the Law.
Article 27 Members of futures trading venues and traders shall, in accordance with the provisions of the futures regulatory authority under the State Council, report major issues such as transactions, positions, and margin.
Article 28 No entity or individual may unlawfully use credit funds or financial funds for futures trading.
Article 29 Futures operators, futures trading venues, futures clearing institutions, futures service providers, and other institutions and their practitioners shall report any prohibited trading activity that they discover to the futures regulatory authority under the State Council in a timely manner.
Section 3 Derivatives Trading
Article 30 A venue established in accordance with the law may organize derivatives trading upon examination and approval by the department authorized by the State Council or the futures regulatory authority under the State Council.
The trading rules formulated by the venues which organize derivatives trading shall fairly protect the legitimate rights and interests of all trading participants and prevent market risks, and shall be reported to the department authorized by the State Council or the futures regulatory authority under the State Council for approval.
Article 31 To carry out derivatives trading, a financial institution shall, subject to approval or verification in accordance with the law, perform its trader suitability management obligations and abide by the relevant regulatory provisions of the State.
Article 32 Where a master agreement is adopted in derivatives trading, the master agreement, all supplementary agreements under the master agreement, and agreements between both parties to the transaction on specific transactions, among others, shall together constitute one entire agreement between both parties to the transaction and be legally binding.
Article 33 Contract templates such as master agreements under Article 32 hereof shall be reported for the record in accordance with the provisions of the department authorized by the State Council or the futures regulatory authority under the State Council.
Article 34 Performance guarantees may be provided for derivatives trading by means of pledge or otherwise in accordance with the law.
Article 35 Where a master agreement is adopted in derivatives trading in accordance with the law, under any agreed circumstance, trading may be terminated in accordance with the agreement, and all trading profits or losses under the agreement are subject to netting.
Netting under the preceding paragraph will not be suspended, invalidated, or revoked due to entry into bankruptcy proceedings by either party to the transaction in accordance with the law.
Article 36 The department authorized by the State Council or the futures regulatory authority under the State Council shall establish a derivatives trading report library to collect, preserve, analyze, and manage information on underlying assets, scale, and counterparties of derivatives trading in a centralized manner, and promptly disclose the relevant information to the market in accordance with the relevant provisions. The specific measures shall be prescribed by the department authorized by the State Council or the futures regulatory authority under the State Council.
Article 37 Where derivatives trading is subject to centralized clearing by a clearing institution as a central counterparty approved by the department authorized by the State Council or the futures regulatory authority under the State Council, netting may be terminated in accordance with the law; clearing property shall be first used for clearing and delivery and shall not be sealed up, frozen, detained, or subjected to enforcement; and may not be used by anyone prior to the completion of clearing and delivery.
Centralized clearing under the preceding paragraph will not be suspended, invalidated, or revoked due to entry into bankruptcy proceedings by any party involved in the clearing in accordance with the law.
Article 38 The specific measures for regulating, supervising, and administrating derivatives trading and related activities shall be prescribed by the State Council in accordance with the principles under the Law.
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Order of the President of the People's Republic of China No.111
April 20, 2022
The Futures and Derivatives Law of the People's Republic of China, which was adopted at the 34th meeting of the Standing Committee of the 13th National People's Congress of the People's Republic of China on April 20, 2022, is hereby promulgated for implementation as of August 1, 2022.
Xi Jinping, President of the People's Republic of China
Futures and Derivatives Law of the People's Republic of China
(Adopted at the 34th meeting of the Standing Committee of the 13th National People's Congress on April 20, 2022)
Contents
Chapter I General Provisions
Chapter II Trading of Futures and Derivatives
Section 1 General Rules
Section 2 Futures Trading
Section 3 Derivatives Trading
Chapter III Futures Clearing and Delivery
Chapter IV Futures Traders
Chapter V Futures Operators
Chapter VI Futures Trading Venues
Chapter VII Futures Clearing Institutions
Chapter VIII Futures Service Providers
Chapter IX Futures Industry Associations
Chapter X Supervision and Regulation
Chapter XI Cross-border Trading and Regulatory Cooperation
Chapter XII Legal Liability
Chapter XIII Supplementary Provisions
Chapter I General Provisions
Article 1 The Futures and Derivatives Law of the People's Republic of China (hereinafter referred to as the "Law") is formulated in order to regulate the trading of futures and derivatives, safeguard the legitimate rights and interests of all parties, maintain market order and public interests, promote the services of futures and derivatives markets for the national economy, prevent and resolve financial risks, and safeguard national economic security.
Article 2 The Law shall apply to the trading of futures and derivatives and related activities within the territory of the People's Republic of China.
Any trading of futures and derivatives and related activities outside the People's Republic of China that disrupt the domestic market order in the People's Republic of China and damage the legitimate rights and interests of domestic traders shall be handled and investigated for legal liability in accordance with the relevant provisions of the Law.
Article 3 For the purpose of the Law, "futures trading" refers to the trading of futures contracts or standardized options contracts.
For the purpose of the Law, "derivatives trading" refers to the trading of swap contracts, forward contracts, and non-standardized options contracts or a combination thereof other than futures trading.
For the purpose of the Law, "futures contract" refers to a standardized contract uniformly formulated by a futures trading venue for the delivery of a certain quantity of the underlying asset on a specified date and at a specified place in the future.
For the purpose of the Law, "options contract" refers to a standardized or non-standardized contract whereby the buyer has the right to buy or sell an agreed-upon underlying asset (including a futures contract) at a predetermined price on a specified date in the future.
For the purpose of the Law, "swap contract" refers to a financial contract for the exchange of a certain underlying asset within a specified time limit in the future.
For the purpose of the Law, "forward contract" refers to a financial contract for the delivery of a certain quantity of the underlying asset on a specified date and at a specified place in the future other than futures contracts.
Article 4 The State supports the healthy development of the futures market and gives play to the functions of the futures market in discovering prices, managing risks, and allocating resources.
The State encourages the use of futures and derivatives markets to engage in risk management activities including hedging.
The State takes measures to promote the development of the futures and derivatives markets of agricultural products and to guide the production and operation of domestic agricultural products.
For the purpose of the Law, "hedging" refers to the trading by traders of futures and derivatives which are basically consistent with their assets and liabilities, among others, to manage the risks arising from changes in value of the aforesaid assets and liabilities, among others.
Article 5 Futures and derivatives markets shall establish and improve a system or mechanism for monitoring, controlling, solving, and disposing of risks to restrict excessive speculation in accordance with the law and prevent systematic market risks.
Article 6 The trading of futures and derivatives shall conform to laws, administrative regulations, and the relevant provisions of the State and follow the principles of openness, fairness, and justice; and fraud, market manipulation, and insider trading shall be forbidden.
Article 7 The parties involved in the trading of futures and derivatives are legally equal and shall abide by the principles of voluntary participation, valuable consideration, and good faith.
Article 8 The futures regulatory authority under the State Council implements centralized and unified supervision and regulation of the futures market nationwide in accordance with the law. Where the supervision and regulation of interest rate and exchange rate futures is otherwise provided for by the State Council, such provision shall prevail.
The derivative market shall be subject to the supervision and regulation by the futures regulatory authority under the State Council or the department authorized by the State Council as per the division of duties.
Article 9 Futures and derivatives industry associations shall implement self-discipline management in accordance with the law.
Article 10 The audit authority of the State shall audit and supervise futures operators, futures trading venues, futures clearing institutions, and the futures regulatory authority under the State Council in accordance with the law.
Chapter II Trading of Futures and Derivatives
Section 1 General Rules
Article 11 Futures trading shall be conducted in a futures exchange established in accordance with the law or any other futures trading venue approved by the futures regulatory authority of the State Council in accordance with the law to carry out futures trading (hereinafter collectively referred to as the "futures trading venue") in an open, centralized manner or any other manner approved by the futures regulatory authority under the State Council.
No futures trading may be conducted outside futures trading venues.
Derivatives trading may be conducted by means of an agreement or any other means prescribed by the State Council.
Article 12 No entity or individual may manipulate the futures or derivatives market.
It is forbidden to manipulate the futures market by any of the following means to influence or attempt to influence the futures trading prices or volumes:
1. independently or in collusion with others, pooling any funding or position advantage or taking advantage of information to purchase or sell contracts jointly or successively;
2. colluding with any other person to conduct futures trading at such time and price and in such manner as agreed upon in advance;
3. effecting any futures trading between accounts actually controlled by the entity or individual;
4. using false or uncertain material information to induce traders to conduct futures trading;
5. lodging and canceling declarations, frequently or in a large amount, not for the purpose of concluding transactions;
6. making public evaluations, predictions or public investment recommendations for the relevant futures trading or the trading of the underlying assets of contracts, and conducting reverse or related operation;
7. forestalling physical goods to influence the quotations of the futures market;
8. circumventing the position limit by improper means and forming position advantages in the delivery month or nearby delivery month;
9. manipulating the futures market by using activities in the relevant markets; and
10. any other means that manipulate the futures market.
Article 13 No insider who has access to any insider information on futures or derivatives trading or any person who has unlawfully obtained any insider information may, before such information is in the public domain, engage in the relevant futures or derivatives trading, explicitly or implicitly instruct others to engage in futures or derivatives trading related to such information, or divulge such information.
Article 14 For the purpose of the Law, "insider information" refers to undisclosed information which may have a significant effect on futures or derivatives trading prices.
Insider information on futures trading shall include:
1. policies, information, or data that are being formulated but have not been issued by the futures regulatory authority under the State Council and other relevant departments and may have a significant effect on futures trading prices;
2. decisions that are made by a futures trading venue or futures clearing institution and may have a significant effect on futures trading prices;
3. funds and trading trends of members of a futures trading venue and traders;
4. information on major abnormal transactions in the relevant markets; and
5. other information that has a significant effect on futures trading prices as prescribed by the futures regulatory authority under the State Council.
Article 15 For the purpose of the Law, "insider" refers to an entity or individual who, by virtue of his/her/its operating, administrative, or supervisory position or advantages in position, among others, has access to or obtains insider information.
Insiders with knowledge of insider information on futures trading shall include:
1. the relevant personnel of futures operators, futures trading venues, futures clearing institutions, and futures service providers;
2. functionaries of the futures regulatory authority under the State Council and other relevant departments; and
3. other entities and individuals who may obtain insider information as prescribed by the futures regulatory authority under the State Council.
Article 16 Entities and individuals are prohibited from fabricating or disseminating any false or misleading information to disrupt futures and derivatives markets.
Futures operators, futures trading venues, futures clearing institutions, and futures service providers and their practitioners, venues and institutions that organize or conduct derivatives trading and their practitioners, futures and derivatives industry associations, the futures regulatory authority under the State Council, and the department authorized by the State Council and their functionaries are prohibited from making any false statement or disseminating any misleading information in the trading of futures and derivatives and related activities.
Futures and derivatives market information disseminated by various types of mass media shall be authentic and objective and shall not be misleading. The mass media and their staff engaged in the reporting of futures and derivatives market information shall not engage in the trading of futures and derivatives and related activities that conflict with their job duties.
Section 2 Futures Trading
Article 17 The listing of futures contract products and standardized options contract products shall comply with the provisions of the futures regulatory authority under the State Council and be reported by futures trading venues in accordance with the law to the futures regulatory authority under the State Council for registration.
The suspension and resumption of listing and delisting of futures contract products and standardized options contract products shall comply with the provisions of the futures regulatory authority under the State Council, be decided by futures trading venues, and reported to the futures regulatory authority under the State Council for the record.
Futures contract products and standardized options contract products shall be of economic value and difficult to manipulate, and conform to public interests.
Article 18 Accounts for futures trading shall be subject to the real-name system. A trader who intends to conduct futures trading shall hold documentary proof of his/her/its identity to apply for opening an account in his/her/its name.
No entity or individual may, in violation of the provisions, lend its/his/her own futures account or borrow any other's futures account for futures trading.
Article 19 Whoever conducts futures trading at a futures trading venue shall be a member of the futures trading venue or any other participant in compliance with the provisions of the futures regulatory authority under the State Council.
Article 20 Traders who entrust futures operators with the trading may give trading instructions in writing, by telephone or self-access terminals, via the internet, or otherwise. The trading instructions shall be clear, specific, and complete.
Article 21 Where a programmatic transaction is automatically generated through a computer program or the issuance of a trading instruction, it shall comply with the provisions of the futures regulatory authority under the State Council and be reported to the relevant futures trading venue, and shall not affect the system security or the normal trading order of such futures trading venue.
Article 22 Futures trading shall be subject to the margin system. Futures clearing institutions shall collect margin from clearing participants, who shall collect margin from traders. The margin shall be used for clearing and performance guarantees.
The forms of margin shall include cash, treasury bonds, stocks, fund shares, standard warrants, and other highly liquid marketable securities, and other property prescribed by the futures regulatory authority under the State Council. Marketable securities, among others, may be used as margin by pledge or other forms with the performance guarantee function in accordance with the law.
A futures clearing institution or clearing participant shall collect margin in such manner and at such ratio as prescribed by the futures regulatory authority under the State Council.
In the trading of a standardized options contract between traders, the seller shall pay margin and the buyer shall pay a premium.
For the purpose of the preceding paragraph, "premium" refers to funds paid by the buyer to purchase a standardized options contract.
Article 23 Futures trading shall be subject to the position limit system to prevent the risk of excessive positions in a contract.
Whoever engages in hedging and other risk management activities may apply for exemption from the position limit.
Administrative measures for position limits and hedging shall be formulated by the futures regulatory authority under the State Council.
Article 24 The actual control relations between traders in futures trading shall be reported for the record. Traders shall report actual control relations to futures operators or futures trading venues for the record in accordance with the provisions of the futures regulatory authority under the State Council.
Article 25 The charges for futures trading shall be reasonable. Charging items and standards and administrative measures shall be publicized.
Article 26 No results of transactions conducted in accordance with the business rules formulated by futures trading venues in accordance with the law may be amended, except as prescribed in Paragraph 2 of Article 89 of the Law.
Article 27 Members of futures trading venues and traders shall, in accordance with the provisions of the futures regulatory authority under the State Council, report major issues such as transactions, positions, and margin.
Article 28 No entity or individual may unlawfully use credit funds or financial funds for futures trading.
Article 29 Futures operators, futures trading venues, futures clearing institutions, futures service providers, and other institutions and their practitioners shall report any prohibited trading activity that they discover to the futures regulatory authority under the State Council in a timely manner.
Section 3 Derivatives Trading
Article 30 A venue established in accordance with the law may organize derivatives trading upon examination and approval by the department authorized by the State Council or the futures regulatory authority under the State Council.
The trading rules formulated by the venues which organize derivatives trading shall fairly protect the legitimate rights and interests of all trading participants and prevent market risks, and shall be reported to the department authorized by the State Council or the futures regulatory authority under the State Council for approval.
Article 31 To carry out derivatives trading, a financial institution shall, subject to approval or verification in accordance with the law, perform its trader suitability management obligations and abide by the relevant regulatory provisions of the State.
Article 32 Where a master agreement is adopted in derivatives trading, the master agreement, all supplementary agreements under the master agreement, and agreements between both parties to the transaction on specific transactions, among others, shall together constitute one entire agreement between both parties to the transaction and be legally binding.
Article 33 Contract templates such as master agreements under Article 32 hereof shall be reported for the record in accordance with the provisions of the department authorized by the State Council or the futures regulatory authority under the State Council.
Article 34 Performance guarantees may be provided for derivatives trading by means of pledge or otherwise in accordance with the law.
Article 35 Where a master agreement is adopted in derivatives trading in accordance with the law, under any agreed circumstance, trading may be terminated in accordance with the agreement, and all trading profits or losses under the agreement are subject to netting.
Netting under the preceding paragraph will not be suspended, invalidated, or revoked due to entry into bankruptcy proceedings by either party to the transaction in accordance with the law.
Article 36 The department authorized by the State Council or the futures regulatory authority under the State Council shall establish a derivatives trading report library to collect, preserve, analyze, and manage information on underlying assets, scale, and counterparties of derivatives trading in a centralized manner, and promptly disclose the relevant information to the market in accordance with the relevant provisions. The specific measures shall be prescribed by the department authorized by the State Council or the futures regulatory authority under the State Council.
Article 37 Where derivatives trading is subject to centralized clearing by a clearing institution as a central counterparty approved by the department authorized by the State Council or the futures regulatory authority under the State Council, netting may be terminated in accordance with the law; clearing property shall be first used for clearing and delivery and shall not be sealed up, frozen, detained, or subjected to enforcement; and may not be used by anyone prior to the completion of clearing and delivery.
Centralized clearing under the preceding paragraph will not be suspended, invalidated, or revoked due to entry into bankruptcy proceedings by any party involved in the clearing in accordance with the law.
Article 38 The specific measures for regulating, supervising, and administrating derivatives trading and related activities shall be prescribed by the State Council in accordance with the principles under the Law.
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