FIA has responded to the China Securities Regulatory Commission’s (CSRC) consultation on its "Administrative Measures for Futures Exchanges." The draft measures can be found here (in Chinese).
The draft Measures are significant as they establish a unified framework and lay down common requirements to be adopted by all futures exchanges established in the People's Republic of China. They set out rules to align with and implement various requirements of the Futures and Derivatives Law, including the central counterparty role played by futures clearing institutions, margin enforcement and default management measures over defaulting clearing participants and segregation of futures margins and positions.
FIA fully supports the policy objectives of the draft Measures.
FIA has also raised some key suggestions and requests for the consideration of the CSRC, namely:
- suggestion for the Measures to provide for the default of a futures clearing institution so that clearing participants will not suffer punitive regulatory capital treatment;
- request for the CSRC to clarify the precise characterisation of the “separate tier” futures settlement model set out in the Measures;
- request for the draft Measures to provide not just for segregation of positions and margin, but also porting; and
- suggestion for a statutory definition of “program trading” to provide clarity to participants.
