The Standing Committee of the National Peoples Congress (NPC) has adopted a new law on futures and derivatives, which will take effect on August 1. It is the first such law since futures and derivatives trading commenced three decades ago. Basic rules to govern futures trading, settlement and delivery are in the new law, said Wang Xiang, Deputy Director of the Office for Economic Law of the NPC’s Legislative Affairs Committee. The new law has also clarified the rules concerning the launch of new products, futures firms’ business scope, and margin payments. The futures and derivative markets will thus give full play to price discovery, risk management and resources allocation, which should spur the real economy, he said. The new law clarifies for the first time the basic rules for futures and derivative trading from the legal perspective.
It provides a legal framework and systematic arrangement for the healthy development of the futures and derivative markets, said Yu Hongzheng, Partner of Junzejun Law Offices. Yang Delong, Managing Director of First Seafront Fund, said a growing number of mutual fund firms have received approval for futures and derivatives trading to meet growing investment demand. The new law will thus pave the way for the introduction of more mutual fund products focused on futures and derivatives trading.
The inclusion of derivative trading is a highlight of the futures and derivatives law, said Li Yating, Vice General Manager of COFCO Futures. Rules related to derivatives such as forward contracts and swaps have all been included in the law, which will better guide the development of the derivatives market, she said. More mature overseas investors and institutions will be attracted to the Chinese market while more domestic futures companies will be able to tap into overseas markets under the new law, the China Daily reports. According to the China Futures Association, the trading volume topped a record 7.5 billion lots last year. Total trading value also hit a historic high of CNY581.2 trillion in 2021. China is the world’s largest futures market for agricultural, nonferrous metals, coke and steam coal products.
