Futures Exchanges in China

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In accordance with the Administrative Regulations on Futures Trading, the State Council of the People’s Republic of China has so far approved the establishment of four futures exchanges: Dalian Commodity Exchange (DCE), Shanghai Futures Exchange (SHFE), Zhengzhou Commodity Exchange (ZCE), and China Financial Futures Exchange (CFFEX).

Legal Foundation[edit]

Article 6 of the Administrative Regulations on Futures Trading of the People’s Republic of China stipulates that the establishment of a futures exchange shall be subject to the examination and approval of the futures supervision and administration department of the State Council.[1]

Regulatory Framework[edit]

Chinese futures exchanges are regulated by the State Council Securities Commission (SCSC) as a monitoring body and the China Securities Regulatory Commission (CSRC) as an implementation body, according to the Notice on Restricting a Blind Development of Futures Markets the State Council issued on Nov. 4, 1993.

Chinese futures exchanges are required by law to enforce futures margin requirements, T+0 no-liability settlement requirement, price limits, position limits, large account position reporting requirement, simultaneous or rolling delivery, and risk reserve requirement.

Organizational Structure[edit]

In China, a futures exchange can take the form of either a membership organization or a corporation. Currently, the DCE, SHFE, and ZCE are taking the form of a membership organization, and the CFFEX is organized as a corporation, whose shares are equally owned by the DCE, SHFE, ZCE, Shanghai Stock Exchange and Shenzhen Stock Exchange. In 2001 three of the Chinese futures exchanges - the SHFE, the DCE and the ZCE - set up online communication.[2]