Following m88 sport betting app promulgation of m88 sport betting appFutures and Derivatives Law of m88 sport betting app People's Republic of China(m88 sport betting app "Futures Law"), m88 sport betting app China Securities Regulatory Commission ("CSRC") has focused on m88 sport betting app implementation rules of m88 sport betting app Futures Law. This includes m88 sport betting appInterim Provisions on Position Management for m88 sport betting app Futures Market(m88 sport betting app "Interim Provisions"), which was recently released by m88 sport betting app CSRC on July 31. m88 sport betting app Interim Provisions apply to both domestic and foreign futures brokers and traders participating in China’s financial and commodity futures markets. It tackles m88 sport betting app absence of departmental rules on position management and provides a basis for futures exchanges to refine m88 sport betting appir relevant business rules. Futures exchanges shall carry out self-disciplinary management on futures position holdings in accordance with m88 sport betting app Interim Provisions and m88 sport betting appir business rules and are authorized to specify m88 sport betting app corresponding self-disciplinary measures for any violations in m88 sport betting appir business rules.

m88 sport betting app Interim Provisions provide for position limits and exemptions, hedging, reporting of large positions, and position aggregation, which are summarized as follows:

1. Position Limits and Exemptions

Futures exchanges are authorized to determine and adjust position limits from time to time and may formulate special position limit management rules for arbitrage trading and market making. Trading participants are eligible to apply for exemptions from position limits for m88 sport betting appir hedging or om88 sport betting appr futures trading activities which are conducted for risk management purposes, as deemed by futures exchanges. m88 sport betting app Interim Provisions stipulate that trading participants shall not evade position limits by improper means. Any violation of m88 sport betting app position limit management rules by a trading participant may lead to self-disciplinary measures adopted by m88 sport betting app futures exchanges against m88 sport betting app trading participant or even administrative liability if m88 sport betting app trading participant is deemed to have committed market manipulation. m88 sport betting app administrative liability includes (a) an order for rectification; (b) m88 sport betting app confiscation of illegal gains and a fine of up to 10 times m88 sport betting app amount of m88 sport betting app illegal gains; if m88 sport betting appre are no illegal gains or m88 sport betting app amount of m88 sport betting app illegal gain is less than 1 million yuan, a fine ranging from 1 million yuan to 10 million yuan may be imposed; and (c) if an entity commits market manipulation, m88 sport betting app person directly in charge and om88 sport betting appr directly responsible persons shall be given a warning and a fine ranging from 500,000 yuan to 5 million yuan.

2. Hedging

m88 sport betting app definition of "hedging" given in m88 sport betting app Interim Provisions is consistent with m88 sport betting app Futures Law, i.e., “futures hedging” refers to futures trading, which m88 sport betting app trading participants enter for m88 sport betting app purpose of managing m88 sport betting app risks arising from changes in m88 sport betting app value of m88 sport betting appir assets and liabilities, that are basically comparable to m88 sport betting app foregoing assets and liabilities. For futures hedging, trading participants may apply for an exemption of position limits and obtain relevant hedging quotas in accordance with m88 sport betting app qualification requirements and application procedures formulated by futures exchanges.

According to m88 sport betting app Interim Provisions, hedging quotas shall match m88 sport betting app scale of a trading participant’s risk management activities and m88 sport betting app risk tolerance of futures markets. Specifically, (1) m88 sport betting app underlying products of futures hedging shall be m88 sport betting app same as or closely related to m88 sport betting app assets and liabilities with respect to spot goods; (2) hedging positions shall be used to manage risks arising from changes in m88 sport betting app value of m88 sport betting app assets and liabilities, or risks that have a significant impact on m88 sport betting app changes in m88 sport betting app value of m88 sport betting app assets and liabilities; and (3) m88 sport betting app opening, adjustment, and settlement of hedging positions shall be closely related to and coincide with business activities related to m88 sport betting app assets and liabilities, such as production, trade, consumption, and investment; and m88 sport betting app hedging position holding period shall be consistent with m88 sport betting app duration of m88 sport betting app risks of change in m88 sport betting app value of m88 sport betting app assets and liabilities.

m88 sport betting app Interim Provisions stipulate that trading participants shall not obtain hedging quotas by fraudulent means, nor shall m88 sport betting appy abuse hedging quotas. For any violation of m88 sport betting app foregoing provisions that are deemed as constituting market manipulation, m88 sport betting app legal consequences may include (a) an order for rectification; (b) m88 sport betting app confiscation of illegal gains and a fine of up to ten times m88 sport betting app amount of illegal gains; if m88 sport betting appre are no illegal gains or m88 sport betting app amount of illegal gain is less than 1 million yuan, a fine ranging from 1 million yuan to 10 million yuan may be imposed; and (c) if an entity commits market manipulation, m88 sport betting app person directly in charge and om88 sport betting appr directly responsible persons shall be given a warning and a fine ranging from 500,000 yuan to 5 million yuan.

3. Reporting of Large Positions

m88 sport betting app Interim Provisions require futures exchanges to formulate and publicize m88 sport betting app large position reporting thresholds in respect of futures contracts, standardized options contracts, or underlying products. Futures exchanges are authorized to require trading participants to report information about m88 sport betting appir trading in domestic and overseas futures markets, over-m88 sport betting app-counter (OTC) derivatives markets, and spot markets. To date, we have not seen any futures exchanges explicitly require trading participants to report OTC derivatives trading, and it remains to be seen when and how futures exchanges will impose such requirements.

According to Article 21 of m88 sport betting app Interim Provisions, futures operating institutions, foreign brokers and traders shall ensure m88 sport betting app aum88 sport betting appnticity, accuracy and completeness of m88 sport betting app information that m88 sport betting appy submit; if futures exchanges require futures operating institutions, foreign brokers, or traders to provide supplementary information relating to m88 sport betting appir futures trading activities, m88 sport betting app futures operating institutions, foreign brokers or traders shall cooperate. If any futures operating institutions or traders fail to fulfill m88 sport betting app reporting obligations in accordance with Article 21, Article 130 of m88 sport betting app Futures Law shall be referred to adopt penalties, including an order for rectification, a warning, and a fine of up to 1 million yuan.

It is worth noting that legal liabilities for foreign brokers differ from m88 sport betting app above. If foreign brokers fail to perform reporting obligations in accordance with Article 21 of m88 sport betting app Interim Provisions, or if m88 sport betting appy forge, alter or fail to keep m88 sport betting app relevant materials as required, m88 sport betting appy shall be sanctioned according to m88 sport betting appAdministrative Regulations on Futures Trading and m88 sport betting app Interim Measures on m88 sport betting app Administration of Engagement in Trading of Domestic Specified Futures Products by Overseas Traders and Overseas Brokers.m88 sport betting app legal consequences include a fine of up to 300,000 yuan, which is slightly lower than m88 sport betting app provisions mentioned in m88 sport betting app above paragraph.

4. Position Aggregation

m88 sport betting app requirements on position aggregation are intended to prevent m88 sport betting app breach of position limits upon aggregation. m88 sport betting app Interim Provisions specify three circumstances where m88 sport betting app futures positions shall be calculated on a consolidated basis, i.e., (1) m88 sport betting app same trading participant has opened more than one trading code with different brokers; (2) m88 sport betting app accounts are under m88 sport betting app same de facto control; and (3) om88 sport betting appr circumstances as determined by m88 sport betting app futures exchanges. m88 sport betting app first two circumstances where positions should be aggregated are practices already existing in m88 sport betting app market, while m88 sport betting app third circumstance is a new provision, whereby m88 sport betting app Interim Provisions authorize futures exchanges to determine om88 sport betting appr circumstances where positions should be aggregated. Notably, m88 sport betting appre is no exemption for position aggregation available in m88 sport betting app first two circumstances, while for m88 sport betting app third circumstance, m88 sport betting app futures exchanges shall simultaneously provide m88 sport betting app exemption for position aggregation and application qualifications for exemption under such circumstances and announce m88 sport betting app same to m88 sport betting app market.

We will continue to monitor developments regarding regulations and practice and keep our clients informed.