Laws of the 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 charge of the recognition, management and revocation of the qualifications of the practitioners;

(4)

Accepting the complaints from the clients concerning the futures business, and mediating the disputes between the members or between the members and clients;

(5)

Safeguarding the legitimate rights and interests of the members, and reporting the suggestions and demands of the members to the futures regulatory institution of the State Council;

(6)

Organizing the vocational training for the practitioners and implementing vocational exchanges between the members thereof;

(7)

Organizing the members thereof to do research on the development and operation of the futures industry; and

(8)

Other duties as provided for in the articles of association of the futures industry.

The business activities of the association of the futures industry shall be subject to the guidance and surveillance of the futures regulatory institution of the State Council.

Chapter VI Surveillance and Administration

Article 50

When implementing the surveillance and administration on the futures market, the futures regulatory institution of the State Council shall perform the duties as follows:

(1)

Formulating rules and regulations on the surveillance and administration of the futures market and exercising the power of examination and approval;

(2)

Performing the surveillance and administration on the listing of the varieties of futures, the trading, settlement, delivery and other related activities concerning the futures trading;

(3)

Performing the surveillance and administration on the futures business activities implemented by the futures exchanges, futures companies and other futures institutions, clearing members of non-futures companies, institution monitoring the safe custody of futures margin, custodian bank of the futures margin, delivery warehouses and other market participants;

(4)

Formulating the qualification standards and administrative measures for the futures practitioners, and surveilling the implementation therefrom;

(5)

Surveilling and inspecting the publicity of information concerning futures trading;

(6)

Guiding and surveilling the activities of associations of the futures industry;

(7)

Punishing any violation of law or administrative relating to the surveillance and administration on the futures market;

(8)

Developing international communication and cooperation activities concerning the surveillance and administration on the futures market; and

(9)

Other duties as provided for by the laws and administrative regulations.

Article 51

When performing its duties, the futures regulatory institution of the State Council may adopt the measures as follows:

(1)

Performing the spot inspections on the futures exchanges, futures companies and other futures operation institutions, clearing members of non-futures companies, institution monitoring the safe custody of futures margin, custodian bank of the futures margin and delivery warehouses;

(2)

Taking investigation and collecting evidence in a place where a suspected illegal act occurs;

(3)

Questioning the parties concerned or any entity or individual regarding a case under investigation and requiring the related entity or person to give explanations on the matters concerning a case under investigation;

(4)

Consulting and copying the register of property right with respect to the case under investigation and other related materials;

(5)

Consulting and copying the futures trading records, financial materials and other related documents and materials of the parties concerned and other entities and individuals with respect to the case under investigation, and sealing up the documents and material that may be transferred, concealed or damaged;

(6)

Consulting the margin account and bank account of the related entities concerning the case under investigation;

(7)

When taking investigation into any serious violation such as manipulation of the futures trading price or insider dealing, the futures trading of the parties concerned in a case under investigation may be restricted upon the approval of the person-in-charge of the futures trading regulatory institution of the State Council, the term of restriction may not be more than 15 trading days. In case of any complex circumstance, the term of restriction may be extended for another 30 trading days; and

(8)

Other measures as provided for by the laws and administrative regulations.

Article 52

The financial statements, operation materials and other related materials shall be submitted to the futures regulatory institution of the State Council by the futures exchanges, futures companies, other futures institutions, as well as institution monitoring the safe custody of futures margin.

The annual reports that are submitted by the futures companies and by other futures institutions shall be examined by special persons as appointed by the futures regulatory institution of the State Council, and examination reports shall be worked out. The signatures of the examiners shall be affixed to the examination reports. In case of any problem found in the examination, the futures regulatory institution of the State Council shall adopt measures accordingly in a timely manner.

The clearing members of non-futures companies, delivery warehouses, as well as the shareholders, actual controllers or other affiliated parties of futures companies may be required to submit related materials by the futures regulatory institution of the State Council if necessary.

Article 53

Where the futures regulatory institution of the State Council performs the duties such as conducting surveillance and inspection or performing an investigation, the entities and individuals under inspection or investigation shall provide related documents and materials faithfully to cooperate with it, and no rejection, handicap or concealment of any related information shall be done. It shall be supported and cooperated by other related departments and entities.

Article 54

The state shall establish a futures investor guarantee fund in accordance with the development of the futures market.

The futures regulatory institution of the State Council shall, jointly with the finance department of the State Council, formulate the specific measures for the raising, management and use of the futures investment fund.

Article 55

The futures regulatory institution of the State Council shall set up and perfect a system for monitoring the safe custody of margins and establish an institution accordingly.

The clients and the futures exchange, futures companies and other futures institutions, clearing members of non-futures companies as well as the custodian banks of futures margins shall abide by the provisions of the futures regulatory institution of the State Council relating to the monitoring of the safe custody of margins.

Article 56

The institution monitoring the safe custody of futures margins shall monitor the safety of the margins subject to the related provisions, and take daily examination. If any problem has been found during this term, it shall be reported to the futures regulatory institution of the State Council in a timely manner. The futures regulatory institution of the State Council shall dispose such problems in accordance with the related provisions of the present Regulation under different circumstances.

Article 57

A qualification administration system shall be implemented by the futures regulatory institution of the State Council for the directors, supervisors, senior managers of futures exchanges, futures companies, other futures institutions, and institutions monitoring the safe custody of futures margin as well as other futures practitioners.

Article 58

A futures regulatory institution of the State Council shall formulate related rules on the continuous business operation of futures companies, in terms of the ratio between the net capital and the net assets of a futures company, the ratio between the net capital and the business scale of futures brokerage businesses within or outside the territory of China, as well as the ratio between the current assets and the current liabilities of a futures company or any other risk surveillance indicator, and shall detail the requirements for the business operation conditions, risk management, internal control, custody of margins, and affiliated transactions of the futures company and the branches thereof.

Article 59

As for a futures company or any of its branches that fails to comply with the rules concerning the continuous business operation or where any business operation risk occurs, the futures regulatory institution of the State Council may perform any interview or giving warnings or keeping credit records to the futures company and its directors, supervisors and senior managers or any other supervisory measures, or order the futures company to make a rectification within a time limit and verify the rectification result therefrom.

Where the futures company fails to make a rectification in a specified time limit, in case of any act that severely endangers the sound operation of the futures company and harms the legitimate rights and interests of the clients thereof, or any involvement in the investigation of the futures regulatory institution of the State Council due to its suspicion of committing any serious violation, the futures regulatory institution of the State Council may adopt the following measures under different circumstances:

(1)

Limiting or suspending some of the futures businesses thereof;

(2)

Terminating the approval of any new business or new branch;

(3)

Restricting the distribution of bonuses, and restricting the payment of remunerations or provision of welfares to the directors, supervisors and senior managers;

(4)

Limiting the transfer of properties or setting up any other right to his properties;

(5)

Ordering the futures company to alter the directors, supervisors, senior managers or the persons in charge of the related business departments or limiting their rights;

(6)

Restricting the allocation, transfer and utilization of the futures company's own fund or risk reserve; and

(7)

Ordering the controlling shareholders to transfer their stock rights or limiting the related shareholders' exercise of their rights.

As for the futures company that observes the related laws, administrative regulations, and the requirements of the continuous business operation rules after the rectification, the futures regulatory institution of the State Council shall terminate the related measures against the said futures company within three days as of the completion of an examination.

As for the futures company that still fails to meet the requirements of the continuous business operation rules after the rectification and the normal business operation of which has been severely affected, the futures regulatory institution of the State Council shall be entitled to revoke the permit for some or all of the futures businesses thereof, or close down its branches.

Article 60

Where any futures company severely disturbs the order of the futures market or harms the clients' interests due to its illegal business operation or serious business risk, the futures regulatory institution of the State Council may order it to terminate the business thereof for rectification or appoint any other institution to manage or take it over or adopt other supervisory measures. The following measures may be adopted against the directly liable directors, supervisors and senior managers, as well as other directly liable personnel upon the approval of the futures regulatory institution of the State Council:

(1)

Informing the exit administrative organ to stop them from exiting the territory of China; and

(2)

Requesting the judicial organ to prohibit him from moving, transferring his properties or disposing his properties by any other means, or setting any other right to his properties.

Article 61

A shareholder of a futures company that makes any fake capital contribution or spirits away the registered capital shall be ordered to make a rectification within a time limit by the futures regulatory institution of the State Council and may be ordered to transfer the stock rights of the futures company it holds.

The futures regulatory authority of the State Council may restrict the shareholders' rights before he corrects the violation and transfers the stock right of the futures company it holds as required in the preceding paragraph.

Article 62

In case of any abnormity in the futures market, the necessary risk measures may be taken by the futures regulatory institution of the State Council.

Article 63

The trading software and clearing software of a futures company shall meet the requirements for the prudent operation and risk management of the futures company, as well as the related requirements of the futures regulatory institution of the State Council for the monitoring of safe custody of margins. As for the trading software or clearing software that fails to satisfy the related requirements, the futures regulatory institution of the State Council shall be entitled to require the futures company to improve it or make a replacement.

The supplier of the trading software or clearing software of the futures company may provide related materials concerning the software as required by the future regulatory institution of the State Council, and shall cooperate with it. The futures regulatory institution of the State Council has the obligation to keep confidential the related materials as provided by the supplier.

Article 64

In case a future company is related to a major lawsuit or arbitration, or the stock rights of which are frozen or used as a collateral, or where any other major event occurs, the futures company and the related shareholders thereof and actual controllers shall submit a report in written form to the futures regulatory institution of the State Council within five days as of the occurrence of the event.

Article 65

An accounting firm, law office, asset appraisal institution or any other intermediary service institution that provides related services to futures companies and other market participants shall observe the laws, administrative regulations and other related provisions of the state concerning the futures and shall offer related materials as required by the futures regulatory institution of the State Council.

Article 66

A mechanism of information sharing, coordination and cooperation in terms of surveillance and administration shall be established by the futures regulatory institution of the State Council and other related departments.

A regulatory cooperative mechanism shall be established by the futures regulatory institution of the State Council and the futures regulatory authorities of other countries or regions to perform the transnational surveillance and administration.

Article 67

Any of the personnel of the futures regulatory institution of the State Council, or a futures exchange, institution monitoring the safe custody of futures margin or custodian bank of futures margins shall be devoted to their duties, impartial and clean, and act according to laws, and shall keep the secret of the state as well as the commercial secret of the related party concerned, may not take advantage of his position to seek illegitimate gains.

Chapter VII Legal Liabilities

Article 68

In case of any of the following acts committed by a futures exchange or a clearing member of a non-futures company, it shall be ordered to make a rectification, be given a warning, and its illegal gains shall be confiscated:

(1)

It Admits any member violating the related provisions;

(2)

To It charges commissions violating the related provisions;

(3)

It uses or distributes the profits violating the related provisions;

(4)

It fails to publish the real-time information, or releasing any information of price forecast as required;

(5)

It fails to fulfill the obligation of reporting to the futures regulatory institution of the State Council as required;

(6)

It fails to submit related documents or materials to the futures regulatory institution of the State Council as required;

(7)

It fails to establish and perfect a margin system;

(8)

It fails to prepare, manage or use risk reserves as required;

(9)

It violates the provisions of the futures regulatory institution of the State Council relating to the monitoring of safe custody of margin;

(10)

It imposes restrictions on the total volume of goods to be delivered by the members thereof;

(11)

It employs personnel unqualified for the futures business; or

(12)

It commits other acts violating the provisions of the futures regulatory institution of the State Council.

In case of any of the acts as specified in the preceding paragraph, the directly liable person in charge and other directly liable persons shall be given a disciplinary sanction and a fine of not less than RMB 10, 000 yuan and not more than RMB 100, 000 yuan shall be imposed thereupon.

Any futures exchange that commits the act as prescribed in Subparagraph (2) of the first paragraph in this Article shall be ordered to give back the overcharged commissions.

In case of any of the acts as prescribed in Subparagraphs (5), (6), (9), (11) and (12) of the second paragraph of this Article committed by an institution monitoring the safe custody of futures margin, it shall be punished and given a sanction subject to the provisions in the first and second Paragraphs. In case of any of the acts referred to in Subparagraph (9) and (12) of the first paragraph of this Article committed by a custodian bank of futures margin, it shall be punished and given a sanction subject to the provisions of the first and second Paragraphs.

Article 69

In case of any of the following acts committed by a futures exchange or any clearing member of a non-futures company, it shall be ordered to make a rectification, be given a warning, be confiscated of its illegal gains, and a fine of not less than one time but not more than five times of the illegal gains shall be imposed. If there are no illegal gains or the amount of the illegal gains is less than RMB 100, 000 yuan, a fine of not less than RMB 100, 000 yuan but not more than RMB 500, 000 yuan shall be imposed thereupon. In case of any serious circumstance, it shall ordered to suspend the business for rectification:

(1)

It handles any of the matters as prescribed in Article 13 of the present Regulation without approval;

(2)

It allows any member to carry out futures trading on a ground that the margin thereof is not enough;

(3)

It participates in future trading directly or indirectly, or conducts any business irrelevant to its duties;

(4)

It collects margins or diverts the margins to other purposes violating the related provisions;

(5)

It falsifies or alters the materials concerning futures trading, settlement and clearing, or fails to preserve such materials as required;

(6)

It fails to set up or perform systems of mark to the market system, price limits, position limits as well as reports of big position holders;

(7)

It rejects or handicaps the surveillance or inspection by the future regulatory institution of the State Council; or

(8)

It commits other acts violating the provisions of the futures regulatory institution of the State Council.

In case of any of the acts referred to in the preceding paragraph committed by a fixtures exchange or any clearing member of a non-futures company, the directly liable person in charge and other directly liable person shall be given a disciplinary sanction and a fine of not less than RMB 10,000 yuan but not more than RMB 100,000 yuan shall be imposed thereupon.

In case of the acts as mentioned in Subparagraphs (3), (7) and (8) of the first paragraph of this Article committed by an institution monitoring the safe custody of futures margin, it shall be punished or given a sanction subject to the first and second Paragraphs.

Article 70

In case of any of the following acts committed by a futures company, it shall be ordered to make a rectification, be given a warning, be confiscated of its illegal gains, and a fine of not less than one time but not more than three times the illegal gains shall be imposed thereupon. If there are no illegal gains or if the amount of illegal gains is not more than RMB 100, 000 yuan, a fine of not less than RMB 100, 000 yuan but not more than RMB 300, 000 yuan shall be imposed. In case of any serious circumstances, it shall be ordered to terminate business for rectification or be revoked of futures business permit thereof:

(1)

It accepts the entrustment of any entity or individual that fails to satisfy the related requirements;

(2)

It allows any client to perform futures trading on the ground that the margin thereof is not enough;

(3)

It handles the matters as listed in Articles 19 and 20 of the present Regulation without approval;

(4)

It implements any activities that are irrelevant to the futures business;

(5)

It conducts self-operation business of futures or does so in any disguised form;

(6)

It provides financing service to its shareholders, actual controllers or other affiliated parties, or provides guaranties to outsiders;

(7)

It violates the provisions of the futures regulatory institution of the State Council with respect to the monitoring of the safe custody of margins;

(8)

It fails to perform the obligation to report or submit the related documents and materials to the futures regulatory institution of the State Council in accordance with the related provisions;

(9)

It uses any trading software or clearing software that fails to meet the requirements for the prudent business operation and risk management of the futures company or the related requirements of the futures regulatory institution of the State Council for the monitoring of safe custody of margins;

(10)

It fails to prepare, manage or use risk reserves as required;

(11)

It falsifies or alters the materials relating to futures trading, settlement and clearing, or fails to preserve such materials pursuant to the related provisions;

(12)

It employs persons unqualified for the futures business;

(13)

It counterfeits, alters, rents, lends, buys or sells any futures business permit or business license;

(14)

It carries out any business by mixing up the codes;

(15)

It rejects or handicaps the surveillance or inspection by the futures regulatory institution of the State Council; or

(16)

It commits other acts violating the provisions of the futures regulatory institution of the State Council.

In case of any of the acts as prescribed in the preceding paragraph committed by a futures company, the directly liable person in charge and other directly liable persons shall be given a disciplinary sanction and a fine of not less than RMB 10, 000 yuan but not more than RMB 50, 000 yuan shall be imposed thereupon. In case of any serious circumstances, the qualifications for assuming the related positions and the qualifications of the futures employees shall be suspended or revoked.

In case of any of the acts as prescribed in Subparagraphs (8), (12), (13), (15) and (16) of the first Paragraph committed by a futures institution other than a futures company, it shall be punished subject to the first and second Paragraphs of this Article.

A shareholder, actual controller or any other affiliate of a futures company may be punished in accordance with the first and second paragraphs of this Article when entrusting others or accepting others' entrustment to hold or managing the stock rights of the futures company without approval, or refusing to cooperate during the inspection of the futures regulatory institution of the State Council, or refusing to perform the obligation to report or submit the related information and materials as required, or submitting or providing any information or materials with any false record or misleading statement or serious omission .

Article 71

In case of any of the following acts relating to cheating the clients committed by a futures company, it shall be ordered to make a rectification, be given a warning, be confiscated of its illegal gains and a fine of not less than one time but not more than 5 times the illegal gains shall be imposed thereupon. If there are no illegal gains or the amount of illegal gains is less than RMB 100, 000 yuan, a fine of not less than RMB 100, 000 yuan but not more than RMB 500, 000 yuan shall be imposed thereupon. In case of any serious circumstances, it shall be ordered to make a rectification or be revoked of the futures business permit thereof:

(1)

It makes a promise of profits to its clients or fails to provide the clients with a risk disclosure statement as required in advance;

(2)

It agrees to share profits or risks with its clients in the business of brokerage;

(3)

It fails to accept the entrustment of any client or fails to carry out futures trading in light of the entrustment of any client;

(4)

It induces any client to give trading instructions by concealing any important event or by other improper means;

(5)

It offers false return on dealings to any client;

(6)

It fails to transmit any client's trading instruction to the futures exchange;

(7)

It diverts the margin of the clients to other purposes;

(8)

It fails to open a margin account in the custodian bank of futures margin or transfers the margin of the clients illegally; or

(9)

It commits other acts concerning cheating the clients as provided for by the futures regulatory institution of the State Council.

In case of any of the acts referred to in the preceding paragraph committed by a futures company, the directly liable person in charge and other directly liable persons shall be given a warning and a fine of not less than RMB 10, 00 yuan but not more than RMB 100, 000 yuan shall be imposed. In case of any serious circumstances, the qualifications for assuming the related positions and the qualifications of futures practitioners shall be suspended or revoked.

An entity or individual that makes up or spread false information about futures trading, disturbs the futures trading market shall be punished subject to the first and second Paragraphs of this Article.

Article 72

As for a futures company, or any other futures institution, or clearing member of a non-futures company, or custodian bank of the futures margin that obtains a futures business permit by offering false application documents or by concealing any important fact by other means of cheating, the futures business permit thereof shall be revoked and the illegal gains shall be confiscated.

Article 73

Where a person that has the inside information about futures trading or person that obtains the inside information about futures trading illegally, if he carries out futures trading by taking advantage of the inside information, or if he divulges the inside information to any other person to help this person perform futures trading by taking advantage of the inside information before the publicity of the information that may considerably affect the futures trading price, the illegal gains shall be confiscated and a fine of not less than one time but not more than five times the illegal gains shall be imposed thereupon concurrently. If there are no illegal gains or if the amount of illegal gains is less than RMB 100, 000 yuan, a fine of not lower than RMB 100, 000 yuan but not more than RMB 500, 000 yuan shall be imposed thereupon. If an entity carries out any insider dealing, the directly liable person in charge and other directly liable persons shall be given a warning and a fine of not lower than RMB 30, 000 yuan but not more than RMB 300, 000 yuan shall be imposed thereupon.

Any of the personnel of the futures regulatory institution of the State Council, or a futures exchange, or an institution monitoring the safe custody of futures margin shall be given a heavier punishment when performing any insider dealing.

Article 74

In case of any of the following acts relating to manipulating the futures trading prices committed by any entity or individual, it shall be ordered to make a rectification, the illegal gains shall be confiscated, and a fine of not lower than one time but not more than five times the illegal gains shall be imposed concurrently. If there are no illegal gains or if the amount of the illegal gains is less than RMB 200, 000 yuan, a fine of not lower than RMB 200, 000 yuan but not more than one million yuan shall be imposed thereupon:

(1)

It manipulates futures trading prices individually or in collusion by way of buying and selling futures contracts by taking advantage of funds or positions it holds or by taking its advantage of information jointly or successively;

(2)

It deliberately colludes with another party to perform futures transactions with each other at a specified time, at a price and in a method agreed upon in advance in order to affect the futures trading prices or the futures trading volume;

(3)

It uses itself as the trading party, acting as the buyer and seller at the same time in order to affect the futures trading prices or the futures trading volume;

(4)

It hoards goods so as to affect futures market prices; or

(5)

It commits other acts relating to manipulating fixtures trading prices as provided for by the futures regulatory institution of the State Council.

In case of any of the acts referred to in the preceding paragraph committed by an entity or individual, the directly liable person in charge and other directly liable persons shall be given a disciplinary sanction and a fine of not lower than RMB 10,000 yuan but not more than RMB 100,000 yuan shall be imposed thereupon.

Article 75

In case of any of the acts as prescribed in Paragraph 2, Article 39 of the present Regulation committed by any delivery warehouse, it shall be ordered to make a rectification, be given a warning, its illegal gains shall be confiscated, and a fine of not lower than one time but not more than five times the illegal gains shall be imposed concurrently. If there are no illegal gains or the amount of the illegal gains is lower than RMB 100, 000 yuan, a fine of not lower than RMB 100,000 yuan but not more than RMB 500,000 yuan shall be imposed. In case of any serious circumstances, the futures exchange shall be ordered to suspend or cancel the qualification of the delivery warehouse. The directly liable person in charge and other directly liable persons shall be given a warning and a fine of not lower than RMB10, 000 yuan but not more than RMB 100, 000 yuan shall be imposed thereupon.

Article 76

As for any state-owned enterprise or state controlled enterprise that carries out futures trading violating the present Regulation or the related provisions of the futures regulatory institution of the State Council and other related departments relating to the enterprises' entering the futures market with the state-owned assets, or any entity or individual that performs futures trading by illegally using any credit fund, treasury fund, it shall be given a warning, the illegal gains shall be confiscated, and a fine of not lower than one time but not more than five times the illegal gains shall be imposed thereupon concurrently. If there are no illegal gains or the amount of the illegal gains is less than RMB 100, 000 yuan, a fine of not lower than RMB 100,000 yuan but not more than RMB 500,000 yuan shall be imposed thereupon. The directly liable person in charge and other directly liable persons shall be given a disciplinary sanction such as demotion or even removal.

Article 77

Where any entity or individual within the territory of China performs futures trading outside the territory of China that is in violation of the related provisions, it shall be ordered to make a rectification, be given a warning, the illegal gains shall be confiscated, and a fine of not less than one time but not more than five times the illegal gains shall be imposed thereupon concurrently. If there are no illegal gains or if the amount of illegal gains is lower than RMB 200, 000 yuan, a fine of not lower than RMB 200, 000 yuan but not more than one million yuan. In case of any serious circumstances, the futures trading outside the territory of China shall be suspended. The directly liable person in charge and other directly liable persons shall be given a warning and a fine of not lower than RMB 10, 000 yuan but not more than RMB 100, 000 yuan shall be imposed thereupon concurrently.

Article 78

Where an entity or individual establishes a futures exchange, futures company or any other futures institution illegally or does so in a disguised form, or illegally conducts futures business, illegally organizes futures trading activities in any disguised form, the said illegal futures exchange, futures company or other futures institutions shall be banned, the illegal gains thereof shall be confiscated, and a fine of not less than one time but not more than five times the illegal gains shall be imposed concurrently. If there are no illegal gains or if the amount of the illegal gains is lower than RMB 200, 000 yuan, a fine of not less than RMB 200, 000 yuan but not more than one million yuan shall be imposed thereupon. The directly liable person in charge and other directly liable persons shall be given a warning and a fine of not lower than RMB 10, 000 yuan but not more than RMB100, 000 yuan shall be imposed thereupon.

Article 79

As for any supplier of the futures company of trading software or clearing software that refuses to cooperate with the futures regulatory institution of the State Council in an investigation, or fails to provide the related software materials to the futures regulatory institution of the State Council as required, or provides software materials with false information or serious omission to the futures regulatory institution of the State Council, it shall be ordered to make a rectification and a fine of not less than RMB 30, 000 yuan but not more than RMB 100, 000 yuan shall be imposed. The directly liable person in charge and other directly liable persons shall be given a warning and a fine of not lower than RMB 10, 000 yuan but not more than RMB 50, 000 yuan concurrently.

Article 80

As for an accounting firm, law office, asset appraisal institution or any other intermediary service institution that fails to be devoted to its duties, or issues documents with any false record, misleading statement or major omission, it shall be ordered to make a rectification, the business income shall be confiscated, its related business license shall be suspended or revoked, and a fine of not less than one time but not more than five times the business income shall be imposed concurrently. The directly liable person in charge and other directly liable persons shall be given a warning and a fine of not lower than RMB 30, 000 yuan but not more than RMB 100, 000 yuan shall be imposed thereupon concurrently.

Article 81

Where an entity or individual is in violation of the present Regulation, in case of any serious circumstances, this individual, this entity or the directly liable persons of this entity shall be prohibited to enter the futures market as announced by the futures regulatory institution of the State Council.

Article 82

As for any of the personnel of the futures regulatory institution of the State Council, or a futures exchange, or an institution monitoring the safe custody of futures margin, or a custodian bank of futures margin that divulges any state secret or any commercial secret of the client he has access to, or commits irregularities for personal interests, neglects his duties, misuses his authorities or accepts any bribe, he shall be given an administrative or disciplinary sanction.

Article 83

Where anyone violates the present Regulation, if any crime is constituted, he shall be subject to the criminal liabilities.

Article 84

The futures regulatory institution of the State Council shall be responsible for deciding the administrative punishments against the violations of the present Regulation. If the statutory functions of other related departments are involved, the futures regulatory institution of the State Council shall punish such violations jointly with other related departments. If a violation falls under the statutory functions of any other related department, it shall be transferred by the futures regulatory institution of the State Council to this department for punishment.

Chapter VIII Supplementary Rules

Article 85

Definitions of the terms as follows:

(1)

Futures contract refers to the standard contract that is made uniformly by a futures exchange and is used to deliver a certain quantity of subject matter at a specified time and place in the future. The futures contracts are divided into commodity futures contracts and financial futures contracts according to the difference in subject matter. The subject matters of commodity futures contracts shall comprise of agricultural products, industrial products, energy and other commodities as well as the related index products thereof. The subject matters of financial futures contracts shall comprise of negotiable instruments, interest rates, foreign exchange rates and other financial products as well as the related index products thereof.

(2)

Option contracts means the standard contracts (including the futures contracts) that is made by a futures exchange uniformly and stipulates that the buyer is entitled to buy or sell a particular subject matter at a prearranged price and at a certain time in the future.

(3)

Margin refers to the funds that are paid by a futures trader used for settlement and as security for the performance of contracts subject to the prescribed standards.

(4)

Settlement refers to the settlement and transfer of financial accounts to for revealing the profit and loss status of both parties to a trade according to the settlement price as announced by the futures exchange.

(5)

Delivery refers to the procedure by which, on the expiration of a futures contract, both trading parties settle the contract that have not yet closed out on the expiration by transferring the ownership of goods as stipulated in the futures contract subject to the rules and procedures of the futures exchange, or settle the difference in cash at a settlement price as prescribed.

(6)

Closing position refers to the activity by which a futures trader purchases or sells a futures contract with the same variety, quantity and month of delivery as those of the futures contract he has held, but is opposite in the direction of trading, so as to close out futures trading.

(7)

Volume of positions held refers to the volume of open contracts that is held by a futures trader.

(8)

Position limit refers the maximum volume of positions that is held by a futures trader as provided for by the futures exchange.

(9)

Warehouse bill refers to a standardized delivery certificate as issued by a delivery warehouse and recognized by a futures exchange.

(10)

Price limits refers to that the trading price of a futures contract may not be higher or lower than the stipulated range on a certain trading day, and a quoted price that is in excess of that range shall be deemed as invalid and the transaction cannot be completed.

(11)

Inside information refers to the information that has not been publicized and might influence the futures trading prices considerately, including the policies as formulated by the futures regulatory institution of the State Council and other related departments that may considerately affect the futures trading prices, the decisions as made by a futures exchange that may considerately affect the futures trading prices, the details of the financial status and trading trends of members and clients of a futures exchange, and other important information that the futures regulator institution of the State Council deems to have a obvious impact on futures trading prices.

(12)

Persons who have access to inside information refers to persons who, supervisory role or profession due to their management position, or who have access to or obtain inside information through their duties as an employee or professional consultant, including the senior managing personnel of a futures exchange, other employees who can obtain inside information due to their positions, personnel of the futures regulatory institution of the State Council, personnel of other related departments, and other persons as provided for by the futures regulatory institution of the State Council.

Article 86

The futures regulatory institution of the State Council may approve the establishment of a exclusive settlement institution that is exclusively responsible for the settlement of futures exchanges, performs other related duties and bears the legal liabilities accordingly.

Article 87

Where institutions outside the territory of China establish, merger or take shares of futures institutions within the territory of China, as well as for futures institutions outside the territory of China establish branches (representative offices) within the territory of China, the administrative measures therefrom shall be formulated by the futures regulatory institution of the State Council jointly with the commerce administrative department, foreign exchange administrative department and other related departments of the State Council and shall be implemented upon approval of the State Council.

Article 88

The futures trading that performs in a trading place as approved by the futures regulatory institution of the State Council other than in a futures exchange shall be subject to the present Regulation.

Article 89

Any institution or market that carries out centralized trading according to standard contracts and takes the following trading mechanism at the same time or bears the feature of either of the following trading mechanism without approval of the futures regulatory institution of the State Council shall be regarded as performing futures trading in a disguised form:

(1)

It provides all buyers and sellers that participate in the centralized trading with a guaranty to perform the contracts; or

(2)

It adopts the mark to the market system and margin system, and collects a sum of margin that accounts for less than 20 percent of the amount of the subject matter of each contract at the same time.

Any institution or market that adopts the trading mechanisms referred to in the preceding paragraph or bears the features of either of the trading mechanisms referred to in the preceding paragraph before the implementation of the present Regulation shall make a rectification within the time limit as provided for by the commerce competent authority of the State Council.

Article 90

Other trading activities of commodities or financial products that is not within the category of futures trading shall be subject to the surveillance and administration of the related competent authorities of the state, and may not be governed by the present Regulation.

Article 91

The present Regulation shall enter into force as of April 15, 2007. The Interim Regulation on the Administration of Futures Trading as promulgated by the State Council on June 2, 1999, shall be concurrently annulled.