In accordance with the Trading Rules of China Financial Futures Exchange and the Measures of China Financial Futures Exchange on Membership Management, matters regarding the pilot participation of commercial banks in China government bond (CGB) futures at China Financial Futures Exchange (the “Exchange”) are hereby notified for the purpose of regulating the pilot program and prevent risks effectively.
1. Commercial banks participating in CGB futures trading shall comply with the relevant laws, administrative regulations, ministry-level rules, Exchange rules and relevant provisions of this notice.
2. Commercial banks shall participate in CGB futures trading in accordance with the requirements of relevant regulatory authorities.
3. During the pilot program, besides meeting the requirements stipulated in Article 7 of the Measures of China Financial Futures Exchange on Membership Management, commercial banks applying for Trading Clearing Membership of the Exchange shall also:
(1) obtain the approval of relevant regulatory authorities;
(2) be capable of market risk management;
(3) have CGB futures mock trading experience;
(4) meet other requirements prescribed by the Exchange.
4. During the pilot program, commercial banks applying for Trading Clearing Membership of the Exchange shall submit the following materials:
(1) the membership application form;
(2) the membership registration form;
(3) documents certifying the approval of the board of directors or its authorized body or the senior management for the bank to engage in CGB futures trading;
(4) a photocopy of business license;
(5) documents certifying the approval of relevant regulatory authorities for the bank to participate in CGB futures trading;
(6) the information form for personnel engaging in futures business as required by the Exchange;
(7) proof of its right to use the domicile (business premises);
(8) overview of internal management systems regarding CGB futures trading, including system of trading, clearing, risk management, internal control, financial management and management of personnel engaging in futures business;
(9) materials for technical preparation;
(10) letter of undertaking on compliance;
(11) letter of authorization;
(12) other materials required by the Exchange.
5. The Exchange shall, within 30 business days of receiving the required application materials, provide a review opinion and, for an approved application, notify the commercial bank to complete the subsequent procedures. Commercial banks applying for membership of the Exchange shall complete the procedures in accordance with the Measures of China Financial Futures Exchange on Membership Management. Failing to do so within the prescribed time limit shall be deemed as forfeiture of the membership.
6. In addition to performing the relevant reporting obligations in accordance with the Measures of China Financial Futures Exchange on Membership Management, commercial banks that have obtained membership shall also:
(1) submit to the Exchange audited data of the previous year before June 30 every year, including registered capital, total assets, net assets, capital adequacy, liquidity, asset-liability ratio, etc.;
(2) provide other materials required by the Exchange.
7. A commercial bank that has obtained membership shall designate a department as the futures clearing department, establish corresponding internal control system, and separate futures margin deposit business from futures clearing business.
8. A commercial bank participating in CGB futures through a futures company member shall be handled in accordance with relevant provisions of the Exchange regarding clients.
9. Any violation of these provisions shall be dealt with in accordance with the Measures of China Financial Futures Exchange on Dealing with Violations and Breaches and other relevant provisions.
This notice shall come into effect on March 9, 2020.
China Financial Futures Exchange
March 1, 2020