On August 14, Dalian Commodity Exchange (DCE) held the “Second Forum on Futures Legal Theories and Practices” in Dalian. More than 20 representatives from the NPC Financial and Economic Committee, the China Securities Regulatory Commission (SCRC), the relevant local courts, public security organs, arbitration institutions, law firms and other units compared notes on the legislative work in futures, how to deal with the violation cases on the futures market and other issues.
At the forum, a DCE official said that in recent years, China's futures market has seen sustained, healthy and rapid development, with the pace of industrial innovation accelerated, the products and systems continuously improved, the asset management, spot subsidiary and other new businesses advanced steadily, and the market’s capacity for serving the industries and the real economy constantly enhanced. The “Some Opinions of the State Council on Further Propelling Sound Growth of the Capital Market” issued this year has charted new directions for the capital market including the futures market. Meanwhile, in order to implement the spirit of the 3rd Plenary Session of the 18th CPC Central Committee and stimulate the market vitality, the regulators have vowed to carry out the “regulatory transformation”, change the work concepts, and push forward streamlining and decentralization, and in the future the futures market will experience development in leaps and bounds. In the new market environment, the market activities violating laws and regulations will show some new situations and problems, and how to respond effectively, especially how to give full play to the role of the forefront market supervisors and strengthen market supervision, is a new task for us. The official also said that DCE will strengthen the contact with the legal profession in various ways, actively listen to the opinions and suggestions of experts and scholars from all walks of life, contribute efforts in the improvement of the market laws and regulations, intensify self-regulation and step up crackdown on violations. It is also hoped that the legal profession could pay continuous attention to the development of the futures market and be more active in participating in the legal construction of the futures market.
An official of the Legal Department of DCE briefed the forum on the types of violation cases, the relevant provisions, disciplinary action and the problems and difficulties in implementing the laws on the futures market. According to the official, China’s early futures market recorded the cases of violating laws and regulations mainly in market manipulation, fraud, misappropriation of clients’ margins and other forms, and in recent years, with China’s futures market developing steadily and the regulatory measures increasingly improved, the violation cases have seen changes in forms and characteristics, mainly in the two forms of manipulating the settlement price of the delivery month and bucketing and transferring funds at present. But some problems are noteworthy in the current judicial practice in the industry, for example, the industry’s research is yet to be deepened in the new-type cases such as market manipulation and the cross-market insider trading. In addition, the link of self-discipline management with administrative penalties and criminal penalties and other problems are also yet to be further addressed.
Representatives from the judicial system said that one of the important reasons for the relatively standardized overall futures market and comparatively few dispute cases at present is that the market has formed a set of rigorous rules and systems and the “five in one” regulatory system, thus effectively preventing the risks. But the futures industry should not take it lightly, as behind the appearance of few market dispute cases, the relevant disputes may have shown in other forms in other processes, to which we should pay special attention; from another perspective, it also reflects the urgent demand for the futures market to accelerate the legal construction so as to make all futures market entities find the laws to abide by.
Representatives from the judicial system said that one of the important reasons for the relatively standardized overall futures market and comparatively few dispute cases at present is that the market has formed a set of rigorous rules and systems and the “five in one” regulatory system, thus effectively preventing the risks. But the futures industry should not take it lightly, as behind the appearance of few market dispute cases, the relevant disputes may have shown in other forms in other processes, to which we should pay special attention; from another perspective, it also reflects the urgent demand for the futures market to accelerate the legal construction so as to make all futures market entities find the laws to abide by.
At the forum, the experts also vigorously discussed the identification of various violations in practice of law enforcement on the futures market, the problems in self-regulation for the exchanges and the cases in practice. The experts pointed out that the futures dispute cases are highly professional, which requires the judicial circle to pay attention to and deepen the research in the futures industry; in the processes of investigation, trial and review of the violation cases, full play should be given to the role of the external experts and lawyers and the CSRC so as to improve efficiency in the handling of the cases and safeguard the market equity; the cases beyond the scope of the self-regulation of the exchanges should be transferred to the CSRC and the public security organs, and smooth communication and coordination mechanisms should be established so as to effectively protect the legitimate rights and interests of investors.
At the forum, the official of the Office of the NPC Financial and Economic Committee and the working group for the “Futures Law” reported the current progress in drafting the “Futures Law”, hoping to listen to the opinions and suggestions of the legal profession in the futures practices for reference in making the Futures Law in the future.
The representatives present at the forum spoke highly of DCE’s efforts in pushing forward and supporting the development of the futures law and building the platforms for exchange in the market legal issues through such forums. This forum, in particular, discussed not only the general issues of system standardization but the actual cases and practices from the perspective of law enforcement, with the combination of the legal theories and self-regulation practices to facilitate the improvement of the judicial system and other relevant work in the industry.
Last May DCE held the first forum on futures legal theories and practices, setting up an effective platform for the in-depth exchanges of the futures market in Dalian and the legal profession and energetically boosting DCE’s work in self-regulation. On the basis of the achievements of the last forum, this event focused on the criteria in identification of the typical violations on the futures market, handling procedures, the linkage mechanism of self-regulation, administrative enforcement of law and criminal justice and other aspects, having deepened the relevant parties’ understanding of the handling of the violation cases, self-regulation and other issues on the futures market and facilitated the legal construction of the futures market.