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Decree of the State Council of People’s Republic of China
No. 489
The Regulation on the Administration of Futures Trading has been adopted at the 168th executive meeting of the State Council on February
7, 2007. It is hereby promulgated and shall enter into force as of April 15, 2007.
Premier Wen Jiabao
March 6, 2007
Regulation on the Administration of Futures Trading
Chapter I General Rules
Article 1
The present Regulation is formulated in order to regulate futures trading, strengthen the surveillance over futures trading, safeguard
the order of the futures market, prevent risks, protect the legitimate rights and interests of all parties to futures trading as
well as the public interests, and improve the energetic yet steady development of the futures market.
Article 2
The present Regulation shall be followed by all entities and individuals conducting futures trading, including the trading based
on commodities contracts, financial futures and options contracts, and other related activities.
Article 3
When conducting the futures trading activities, the principle of openness, fairness, justness and good faith shall be followed. No
illegal activity like fraud, insider dealing and manipulated futures trading prices is permitted.
Article 4
The futures trading shall be performed in the futures exchanges established subject to the law or in other trading places as approved
by the futures regulatory institution of the State Council.
No futures trading is permitted in any place other than those as approved by the futures regulatory institution of the State Council
and nor in any disguised form.
Article 5
The futures regulatory institution of the State Council shall implement uniform surveillance and administration over the futures
markets.
The agencies of the futures regulatory institution of the State Council shall perform the responsibilities of surveillance in accordance
with related provisions of the present Regulation and upon the authorization of the futures regulatory institution of the State Council.
Chapter II Futures Exchange
Article 6
The futures regulatory institution of the State Council shall be in charge of the examination and approval for establishing a futures
exchange.
No entity or individual may set up any futures exchange or organize any futures trading and other related activities in any form without
approval of the futures regulatory institution of the State Council.
Article 7
A futures exchange, which may not take profit-making as its purpose, shall carry out self-disciplinary management in light of its
articles of association. It shall bear civil liabilities to the extent of all of its properties. The person in charge of a futures
exchange shall be designated and dismissed by the futures regulatory institution of the State Council.
The measures for the administration of the futures exchanges shall be formulated by the futures regulatory institution of the State
Council.
Article 8
The member of a futures exchange shall be an enterprise as a legal person or other economic organization that is set up and registered
within the territory of the People’s Republic of China.
A futures exchange may establish a graded member clearing system. The members under the graded member clearing system shall include
the clearing members and non-clearing members.
The qualification for the clearing business of a clearing member shall be approved by the futures regulatory institution of the State
Council. The futures regulatory institution of the State Council shall make a decision of approval or disapproval within three months
as of the receipt of an application for the clearing business qualifications.
Article 9
Where any of the circumstances as prescribed in Article 147 of the Company Law of the People’s Republic of China or any of the following
circumstances occurs, the person may not hold the position of the person in charge or accountant of the futures exchange:
(1)
persons who are the person in charge of a futures exchange, stock exchange or securities register and clearing institution, or the
director, supervisor or senior manager of a futures company or securities company, or any other person as provided for by the futures
regulatory institution where less than five years has elapsed since the date of relieving of his post due to his violation of laws
or disciplines; or
(2)
persons who are lawyers, certified public accountants, or professionals of an investment consultation institution, financial consultancy
institution, credit rating institution, asset appraisal institution or verification institution, where less than five years has elapsed
since the date of relieving of his post due to his violation of laws or disciplines.
Article 10
A futures exchange shall formulate and improve various rules in accordance with the present Regulation and the provisions of the
futures regulatory institution of the State Council, and enhance the risk control of trading activities as well as the surveillance
over its members and staff. The duties shall be performed as follows:
(1)
Providing a trading site and related facilities and services;
(2)
Designing contracts and arranging the listing of contracts;
(3)
Organizing and supervising the transactions, clearing and delivery;
(4)
Ensuring the performance of contracts;
(5)
Surveilling and administering its members subject to its articles of association and trading rules; and
(6)
Other duties as provided for by the futures regulatory institution of the State Council.
No futures exchange may participate in futures transactions directly or indirectly. No futures exchange may make trust investments,
stock investments, investments in non-self-use real property or conduct any other business irrelevant to its duties without going
through the verification of the futures regulatory institution of the State Council and applying for approval to the State Council.
Article 11
A futures exchange shall establish and perfect the following systems for risk control under related provisions of the State:
(1)
The margin system;
(2)
The mark to the market system;
(3)
The system of price limits;
(4)
The system of position limits as well as reports of big position holders;
(5)
The systems of the risk reserve; and
(6)
Other risk control systems as provided for by the futures regulatory institution of the State Council.
A futures exchange that has established the graded member clearing system shall set up and perfect a system of security deposits.
Article 12
Where any abnormal circumstance in the futures market occurs, the futures exchange shall determine the following urgent measures
and shall make a report immediately to the futures regulatory institution of the State Council pursuant to the power and procedures
as prescribed in its articles of association:
(1)
Uplifting the margin;
(2)
Adjusting the price limits;
(3)
Limiting the maximum amount of futures held by its members or clients;
(4)
Suspending the transactions; and
(5)
Taking other urgent measures.
Abnormal circumstance as referred to in the preceding paragraph means the acts of manipulating the futures trading prices in the business
or the occurrence of emergencies due to any force majeure and other circumstances as provided for by the futures regulatory institution
of the State Council.
The futures exchange shall cancel the urgent measures in a timely manner after the disappearance of the abnormal circumstance.
Article 13
A futures exchange shall be subject to the approval of the futures regulatory institution of the State Council when handling such
affairs as follows:
(1)
Formulating or modifying its articles of association or trading rules;
(2)
Listing, suspending, canceling or resuming any type of transaction;
(3)
Listing, modifying or terminating any contract;
(4)
Altering its domicile or business site;
(5)
Merging, splitting or dissolving; or
(6)
Other items as provided for by the futures regulatory institution of the State Council.
The futures regulatory institution of the State Council shall solicit for opinions of the related department of the State Council
when approving the listing of new transaction type in a futures exchange.
Article 14
The revenues of a futures exchange shall be managed and utilized under related provisions of the state, but shall be primarily used
to ensure the operation and improvement of the futures exchange and the facilities thereof.
Chapter III Futures Companies
Article 15
A futures company refers to a financial institution which is set up in accordance with the Company Law of the People’s Republic of
China and the present Regulation and which conducts the business of futures. To set up a futures company shall be subject to the
approval of the futures regulatory institution of the State Council and shall be registered in the company registration organ.
No entity or individual may set up any futures company to conduct the business of futures, or do so in any disguised form without
approval of the futures regulatory institution of the State Council.
Article 16
The applicants shall meet the requirements in the Company Law of the People’s Republic of China and the following circumstances when
applying for the establishment of a futures company:
(1)
having registered capital of RMB 30 million yuan or more;
(2)
having directors, supervisors and senior managers with the qualifications for holding their positions and the employees with the futures
practicing qualifications;
(3)
having its articles of association which comply with the laws and administrative regulations;
(4)
having a continuous profit-making capacity and a good reputation of the main shareholders and actual controllers, and no record of
serious violation in the recent three years thereof;
(5)
having a qualified business site and operation facilities;
(6)
having sound risk management and internal control systems;
(7)
Other circumstances as provided for by the futures regulatory institution of the State Council.
The futures regulatory institution of the State Council may raise the minimum amount of the registered capital upon the principle
of prudent supervision and the degree of risks of various businesses. The registered capital shall be actually paid-in capital. The
shareholders shall make capital contributions in cash or in kind essential to the business operations of a futures company and the
capital contributions in cash shall be more than 85 percent of the total.
The futures regulatory institution of the State Council shall make an examination subject to the principle of prudent supervision,
and make a decision of approval or disapproval within six months as of the receipt of an application for setting up a futures company.
No entity or individual may entrust any other person or accept any other person’s entrustment to hold or manage the stock rights of
any futures company without approval of the futures regulatory institution of the State Council.
Article 17
A licensing system shall be performed for the business of futures companies. A permit shall be granted by the futures regulatory
institution of the State Council in accordance with the business type such as commodity futures and financial futures. Besides the
futures brokerage within the territory of China, a futures company may apply for conducting futures brokerage, futures investment
consultation outside the territory of China and other futures businesses as provided for by the futures regulatory institution of
the State Council.
No futures company may conduct any activity that is irrelevant to the futures business, unless otherwise stipulated by any law, administrative
regulation, or by the futures regulatory institution of the State Council.
No futures company may conduct any self-operation business of futures, nor in any disguised form.
The futures company may neither offer financing service to the shareholders, actual controllers or other affiliated parties thereof,
nor provide guaranty to outsiders.
Article 18
Where a futures company conducts brokerage business, when accepting the entrustment of any client and carrying out any futures transaction
for the client thereof in its own name, the transaction results shall be borne by the client.
Article 19
When a futures company handles the following issues, it shall be subject to the approval of the futures regulatory institution of
the State Council:
(1)
The merger, split-up, suspension of business, dissolution or bankruptcy;
(2)
The alteration of the company form thereof;
(3)
The alteration of the business scope thereof;
(4)
The alteration of the registered capital thereof;
(5)
The alteration of 5 percent or more of the stock rights thereof;
(6)
The establishment, acquisition, taking shares, or termination of any overseas futures institution; or
(7)
Other issues as provided for by the futures regulatory institution of the State Council.
As for the issues referred to in Subparagraphs (4) and (7) in the preceding paragraph, the futures regulatory institution of the State
Council shall make a decision of approval or disapproval within 20 days as of the receipt of an application. With respect to other
issues as prescribed in the preceding paragraph, the futures regulatory institution of the State Council shall make a decision of
approval or disapproval within two months as of the receipt of an application.
Article 20
Where a futures company handles any of the following issues, it shall be subject to the approval of the agency of the futures regulatory
institution of the State Council:
(1)
Altering the legal representative thereof;
(2)
Altering the domicile or business site;
(3)
Establishing or terminating branch within the territory of China;
(4)
Altering the business site, person in charge or business scope of any branch within the territory of China; or
(5)
Other issues as provided for by the futures regulatory institution of the State Council.
As regards the issues as mentioned in Subparagraphs (1), (2), (4) and (5) of the preceding paragraph, the agency of the futures regulatory
institution of the State Council shall make a decision of approval or disapproval within 20 days as of the receipt of an application.
For the affairs as described Subparagraph (3) in the preceding paragraph, the agency of the futures regulatory institution of the
State Council shall make a decision of approval or disapproval within two months as of the receipt of an application.
Article 21
In case of any of the circumstances as prescribed in Article 70 of the Administrative License Law of the People’s Republic of China
or any of the following circumstances committed by a futures company or any of the branches thereof, the futures regulatory institution
of the State Council shall cancel the futures business permit thereof:
(1)
The business license thereof is cancelled by the company registration organ in accordance with related laws;
(2)
It fails to start business operations for three months or more as of the establishment without any justifiable reason, or suspends
its business operations for three consecutive months or longer;
(3)
It submits a cancellation application on its own initiative; and
(4)
Other circumstances as provided for by the futures regulatory institution of the State Council.
A futures company shall settle the related futures businesses and return the margin and other assets to the clients thereof in accordance
with related laws before the cancellation of the futures business permit. Any branch of the futures company shall terminate its business
activities before the cancellation of the business permit and shall settle the clients’ assets properly.
Article 22
A futures company shall establish and perfect business management rules and risk control rules and implement them rigidly, shall
observe the information revealment rules, guarantee the safe custody of the clients’ margin, and report to the futures exchange the
name list of the big clients thereof and the related transactions upon the provisions of the futures exchange.
Article 23
As regards other futures institutions conducting futures investment consultation services and providing intermediary services for
futures companies, they shall obtain the practicing qualifications as approved by the futures regulatory institution of the State
Council. The futures regulatory institution of the State Council shall be responsible for formulating the concrete administrative
measures.
Chapter IV Basic Rules on Futures Trading
Article 24
The parties that carry out futures trading in a futures exchange shall be members of the futures exchange.
Article 25
When accepting a client’s entrustment to trade futures on his account, a futures company shall offer the client with a risk disclosure
statement in advance, and shall conclude a contract in written form with the client after the confirmation of him with a signature.
No futures company may perform futures trading without client’s entrustment or without following the client’s entrustment.
The futures company may neither make any promise of profits to the clients thereof, nor agree on sharing profits or risks with them.
Article 26
Any of the following entities and individuals may not conduct the futures trading. No futures company may accept the entrustment
thereof to trade futures
(1)
The state bodies and public institutions;
(2)
The futures regulatory institution of the State Council, the futures exchanges, the institution that monitors the safe custody of
futures margin, as well as the personnel of the associations of the futures industry;
(3)
The persons that are prohibited to enter into the futures market;
(4)
The entities and individuals can not provide documents certifying that they have opened an account; and
(5)
Other entities and individuals that are not allowed to trade futures as provided for by futures regulatory institution of the State
Council.
Article 27
A client may offer trading instructions to the futures company by ways of writing, telephone, the internet or any other methods as
provided for by the futures regulatory institution of the State Council. The said instructions shall be clear and complete.
The futures company may not induce any client to give trading instructions by concealing any important issue or by any other improper
means.
Article 28
A futures exchange shall publicize the futures contracts of the marketed varieties in a timely manner, in terms of the trading volume,
trading price, volume of positions held, the highest and lowest prices, opening and closing prices, and other real time market information
that shall be publicized, and guarantee the truthfulness and accuracy of the information publicized. No price forecasts information
may be released by any futures exchange.
No real time market information about futures trading may be released by any entity or individual without permission of the futures
exchange.
Article 29
The margin system shall be implemented rigidly in the futures trading. The margin that a futures exchange collects form the members
thereof and a futures company collects from its clients may not be less than the rates as provided for by the futures regulatory
institution of the State Council, or by the stock exchange, and it shall be deposited in a exclusive account that is separated from
the futures company’s own money.
The margin that is collected by a futures company from the clients thereof, belongs to the clients, and shall be prohibited to be
misused for other purposes except for the settlement among its members.
The margin as collected by a futures company from the clients thereof belongs to the clients and shall be strictly prohibited to be
misused for other purposes except for the transferable circumstances as follows:
(1)
Paying the money available as required by the clients;
(2)
Depositing the margin or paying commissions or taxes on the clients’ account; and
(3)
Other circumstances as provided for by the futures regulatory institution of the State Council.
Article 30
A futures company shall open an exclusive account and set up a separate trading code for each of the clients and may not mix up the
codes in the futures trading.
Article 31
Where a futures company conducts the futures brokerage business and other futures businesses as well, it shall observe the principle
of separation of business and separation of funds rigidly, and may not mix them up.
Article 32
The standard warehouse bills, government bonds and other negotiable securities with stable value and high liquidity may be given
by the members and clients of a futures exchange as the margin for the futures trading. The futures regulatory institution of the
State Council shall be in charge of prescribing the types of the securities, methods for calculation, and the proportion of negotiable
securities as margin.
Article 33
Where a banking financial institution conducts the custody of futures margin and in the settlement of futures, the qualifications
thereof shall be reported to the futures regulatory institution of the State Council for approval under the examination and approval
of the banking regulatory institution of the State Council.
Article 34
The clearing members of a futures exchange, futures company or non-futures company shall withdraw, manage and use the risk reserve
subject to the provisions of the futures regulatory institution of the State Council and of the finance department, may not misappropriate
it.
Article 35
The related competent authority of the State Council shall be responsible for uniformly formulating and publicizing the items, rates
of service fees as well as the related administrative measures.
Article 36
An open and centralized method for business shall be applicable for the futures trading or any other form as approved by the future
regulatory institution of the State Council.
Article 37
The futures exchange shall organize the settlement of futures trading uniformly.
The futures exchange shall implement the mark to the market system. It shall notify the members of the trading results on the current
day in a timely manner.
A futures company shall carry out the settlement about the transactions to the clients in accordance with the settlement result of
the futures exchange and shall notify the client of the said result in a way as agreed with the client in a timely manner. The client
shall inquire and properly deal with his trading positions timely.
Article 38
Where the margin of a futures exchange member is not enough, this member shall replenish the margin or close his positions on his
own initiative in a timely manner. If the aforesaid member fails to do so within the time limit as provided for by the futures exchange,
his futures contract shall be forcibly closed by the futures exchange, and the related expenses or losses so incurred shall be borne
by the member.
Where the margin of a client of a futures exchange is not enough, this client shall replenish the margin or close his positions on
his own initiative in a timely manner. If the aforesaid member fails to do so within the time limit as provided for by the futures
exchange, his futures contract shall be forcibly closed by the futures exchange, and the related expenses or losses so incurred shall
be borne by the client.
Article 39
The futures exchange shall uniformly organize the delivery in futures trading.
The delivery warehouse shall be appointed by a futures exchange. The futures exchange may not restrict the total amount of the delivery
settlement, and it shall conclude an agreement with the delivery warehouse to specify the rights and obligations respectively. No
following act shall be committed by the delivery warehouse:
(1)
issuing any false warehouse bill;
(2)
violating the business rules of the futures exchange, or restricting the entering or leaving of the goods in the delivery warehouse;
(3)
divulging any business secret with respect to the futures trading;
(4)
participating in the futures trading that is in violation of the related provisions of the state; or
(5)
any other acts as provided for by the futures regulatory institution of the State Council.
Article 40
Where any member has a breach of contract in futures trading, the margin of this member shall be used by the futures exchange for
bearing the liability for breach of contract. If the margin is not enough, the risk reserve and the funds owned by the futures exchange
shall be used for bearing the liabilities on the account of the said member, and then this futures exchange has the right to claim
repayment afterwards against the member in question.
If a client has a breach of contract in futures trading, the margin of the client shall be firstly used by the futures exchange for
bearing the liability for breach of contract. If the margin is not enough, the risk reserve and the funds of this futures exchange
shall be used for bearing the liabilities on that client’s account, and then the said futures exchange has the right to claim repayment
afterwards against the client in question.
Article 41
Where a futures exchange performs a graded member clearing system, it shall collect a sum of security from each of the clearing members
thereof. The futures exchange shall merely carry out settlement with the clearing members, collect and supplement security money,
the clearing security money, risk reserve and the fund of this futures exchange shall be used for bearing the liabilities for breach
of contract on the clearing members’ account, and other related measures shall be adopted. The clearing members shall be responsible
for performing settlement with the non-clearing members, collecting and supplementing security money, and bearing the liabilities
for breach of contract on the non-clearing members’ account with the clearing security money, risk reserve and their own fund, and
adopting other related measures.
Article 42
The completeness and safety of the futures trading, settlement and delivery materials shall be guaranteed by the clearing members
of a futures exchange or future company or non-futures company.
Article 43
No false information about futures trading may be fabricated or spread by any entity or individual, nor may manipulate the futures
trading prices by malicious collusion, joint trading or by other means.
Article 44
No entity or individual may use any credit fund or treasury fund for carrying out futures trading in violation of related rules.
Where a banking financial institution conducts the financing or guaranty business regarding futures trading, the qualifications thereof
shall be subject to the approval of the banking regulatory institution of the State Council.
Article 45
When conducting futures trading within or outside the territory of China, the state-owned or state controlled enterprises shall observe
the hedging principle and strictly follow the related provisions of the state-owned asset surveillance and administration institution
of the State Council and other related departments on enterprises’ entering the futures market with state-owned assets.
Article 46
The commerce competent authority of the State Council shall be in charge of the examination and verification of the varieties of
commodity futures which may be traded outside the territory of China by the entities or individuals within the territory of China.
The purchase, settlement, incomes and expenses of foreign exchange under the futures outside the territory of China shall comply with
the related provisions of the state on the administration of foreign exchange.
The measures for entities or individuals within the territory of China to conduct futures trading outside the territory of China shall
be formulated by futures regulatory institution of the State Council jointly with the commerce administrative department, state-owned
asset surveillance and administration institution, banking regulatory institution, foreign exchange administrative department and
other related departments of the State Council, and shall be performed subject to the approval of the State Council.
Chapter V Associations of the Futures Industry
Article 47
The associations of the futures industry shall be self-disciplinary organizations of the futures industry. They are mass organizations
as a legal person.
The futures companies and other institutions that conduct futures trading exclusively shall join an association of the futures industry
and pay the membership fee.
Article 48
The authority of an association of the futures industry shall be the general assembly of the members thereof.
The general assembly of the members thereof shall prepare for the articles of association of the association of the futures industry
and shall submit them to the futures regulatory institution of the State Council for archival filing.
The association of futures industry shall establish a council, the members of which shall be elected in accordance with the articles
of association.
Article 49
The following duties shall be performed by the association of the futures industry:
(1)
Organizing and educating the members to follow the laws, regulations and policies concerning futures;
(2)
Formulating industrial self-disciplinary rules that shall be observed by the members, surveilling and inspecting the members’ acts,
and giving a disciplinary sanction to any member who is in violation of the articles of association or self-disciplinary rules of
the association;
(3)
Taking
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Circular of the National Development and Reform Commission on Cooperating with Finance Administrative Departments to Do Well in the
Implementation of Preferential Tax Policies for Startup Investment Enterprises
Fa Gai Cai Jin [2007] No. 609
Each archival organ for startup investment enterprises at the provincial level:
For the purpose of promoting the development of startup investment enterprises, the Ministry of Finance and the State Administration
of Taxation have jointly promulgated the Circular Concerning Related Tax Policies for Promoting the Development of Startup Investment
Enterprises (see the Affix, and hereinafter referred to as the Tax Policy Circular) on February 15, 2007. In accordance with the
Tax Policy Circular and the Interim Measures for Administrating Startup Investment Enterprises (hereinafter referred to as the Measures)
as jointly promulgated by the National Development and Reform Commission, the Ministry of Finance, the State Administration of Taxation
and other seven ministries and commissions in November 2005, the related matters are hereby notified as follows so as to coordinate
the implementation of the Tax Policy Notice:
1.
In accordance with Item (1), Article 1 of the Tax Policy Circular, all archival organs shall, according to Articles 9 to 11 of the
Measures, rigidly inspect the archival filing requirements of a startup investment enterprise, and shall also examine the name used
in the industrial and commercial registration and the business scope of the archived startup investment enterprise again. Where a
startup investment enterprise completes the industrial and commercial registration prior to the promulgation of the Measures on November
15, 2005, the original registered name may be retained, but the business scope shall satisfy provisions in the Measures. Where a
startup investment enterprise completes the industrial and commercial registration after the promulgation of the Measures on November
15, 2005, it shall be registered as professional startup investment enterprises such as a “Start-up Investment Company Limited”,
“Start-up Investment Joint-stock Company Limited”, etc.
2.
Whereas the deadline for the settlement and payment of each variety of enterprise income taxes is April 30 for the past years, for
the purpose of timely implementing preferential tax policies, the archival organ at each level shall, together with the finance administrative
department, verify as soon as possible whether the investment is made by the startup investment enterprises before the deadline as
provided for in the Measures, and inform the startup investment enterprises of doing well in declaring tax deduction. For the purpose
of ensuring that the investments made by startup investment enterprises practically conform to the related provisions in the Measures,
the archival organ shall, in accordance with Article 27 of the Measures, make irregular inspections into archived startup investment
enterprises and their management consulting enterprises, and finish regular annual inspections within five months after each accounting
year ends. Where a startup investment enterprise whose investment does not conform to the related provisions in the Measures upon
irregular inspections, it may not apply for deductions in taxable incomes after the year. Where It is found in regular inspections
that the investment of a startup investment enterprise investment does not conform to the related provisions in the Measures upon
regular inspections, the finance administrative department at the same level shall be suggested to cancel the deduction amount of
taxable incomes obtained upon application on the basis of the investment amount of the last year.
3.
According to Article 6 of the Tax Policy Circular, the provincial finance administrative department of each province, autonomous
region, or municipality directly under the Central Government shall, together with the archival organ, examine and announce the name
list of startup investment enterprises that can enjoy tax preferences, and the provincial archival organ shall report this Commission
the name list of startup investment enterprises that can enjoy tax preferences.
Affix: Circular Concerning Related Tax Policies for Promoting the Development of Startup Investment Enterprises
The National Development and Reform Commission of the People’s Republic of China
March 20, 2007
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