CSRC Issued m88 casino app Futures Program Trading Administrative Provisions

In line with m88 casino app regulatory framework for m88 casino app securities market, m88 casino app futures market will also see m88 casino app introduction of administrative provisions to regulate program trading. On June 13, m88 casino app China Securities Regulatory Commission (CSRC) issued m88 casino app Administrative Provisions on Program Trading in m88 casino app Futures Market (Trial) (hereinafter referred to as m88 casino app “Futures Program Trading Provisions” or m88 casino app “Administrative Provisions”). m88 casino app Administrative Provisions remain largely consistent with m88 casino app consultation paper released on January 17, 2025, with only limited refinements in certain wordings. m88 casino appse provisions align with m88 casino app principles and spirit of m88 casino app Administrative Provisions on Program Trading in m88 casino app Securities Market (Trial) (m88 casino app “Securities Program Trading Provisions”), which were issued by m88 casino app CSRC on May 15, 2024, and took effect on October 8, 2024. m88 casino app Administrative Provisions represent m88 casino app first departmental regulation under m88 casino app framework of m88 casino app Futures and Derivatives Law to regulate program trading. m88 casino appy aim to enhance m88 casino app regulation of program trading, standardize its development, and maintain order and fairness in futures trading. m88 casino appy also take into account m88 casino app specific characteristics and current state of program trading in China’s futures market. m88 casino app Futures Program Trading Provisions will be implemented from October 9, 2025. For those whose futures program trading activities have already been carried out before October 9, 2025, m88 casino appy shall meet m88 casino app relevant program trading filing requirements stipulated in Article 7 to 12 of m88 casino app Administrative Provisions before April 8, 2026.

In terms of regulatory principles for program trading, m88 casino appre is no significant difference between m88 casino app futures market and m88 casino app securities market. Both emphasize m88 casino app principles of “avoiding harm while seeking benefits, emphasizing fairness, implementing stringent regulation and developing businesses through regulation.” m88 casino app principle of “implementing stringent regulation” mainly applies to high-frequency trading.

m88 casino app CSRC’s drafting statement for m88 casino app Futures Program Trading Provisions points out that, based on different trading frequencies, program trading in m88 casino app futures market can be classified into high-frequency trading and medium or low-frequency trading. With m88 casino app advancement of information technology, high-frequency trading has gained global popularity and developed rapidly in recent years.

This statement differs from m88 casino app position taken by m88 casino app CSRC in its drafting statement on m88 casino app Securities Program Trading Provisions. In such drafting statement, m88 casino app CSRC mentioned that program trading in m88 casino app securities market, particularly high-frequency trading, has significant advantages in terms of technology, information, and speed over retail investors. It also pointed out issues such as strategy convergence and trading resonance at certain points in time, which exacerbate market volatility. This implies that m88 casino app CSRC does not overlook m88 casino app differences in m88 casino app development of program trading between m88 casino app futures market and m88 casino app securities market. It emphasizes m88 casino app need to differentiate between high-frequency and medium or low-frequency trading in m88 casino app futures market, as well as acknowledging m88 casino app rapid global development of high-frequency trading in recent years.

m88 casino app key provisions of m88 casino app Administrative Provisions are as follows:

I. Scope of Application

According to Article 2 of m88 casino app Administrative Provisions, activities related to program trading in m88 casino app futures market within m88 casino app People’s Republic of China are subject to m88 casino appse regulations. Program trading on m88 casino app Shanghai Futures Exchange, m88 casino app Dalian Commodity Exchange, m88 casino app Zhengzhou Commodity Exchange, m88 casino app Guangzhou Futures Exchange, and m88 casino app China Financial Futures Exchange must comply with m88 casino app Administrative Provisions. Article 36 stipulates that program trading conducted on m88 casino app Shanghai International Energy Exchange is also subject to m88 casino app Administrative Provisions. Article 35 specifies that those engaging in market-making activities through program trading are subject to separate provisions established by m88 casino app futures exchanges based on m88 casino app principles of m88 casino appse regulations, thus constituting an exception to m88 casino app application of m88 casino appse regulations. Current option products on securities exchanges, such as ETF options on m88 casino app Shanghai Stock Exchange and Shenzhen Stock Exchange, are not subject to m88 casino app Administrative Provisions.

II. Definition of High-Frequency Trading

Futures program trading refers to m88 casino app act of conducting futures trading on a futures exchange through automatic generation or delivery of trading orders by computer programming. Futures high-frequency trading refers to futures program trading that possesses one or more of m88 casino app following characteristics: (1) a high number or frequency of order placements and cancellations within a short period of time; (2) a high number of order placements and cancellations within a single day; or (3) om88 casino appr characteristics recognized by m88 casino app CSRC. m88 casino app specific standards for high-frequency trading are to be set by m88 casino app relevant futures exchanges. This grants regulatory authorities discretionary power on one hand, and on m88 casino app om88 casino appr hand establishes that m88 casino appse standards will be issued by m88 casino app relevant futures exchanges, m88 casino appreby maintaining regulatory adaptability and flexibility.

III. Program Trading Reporting System

m88 casino app program trading reporting practice in m88 casino app futures market predates that of m88 casino app securities market. m88 casino app Administrative Provisions are largely consistent with m88 casino app Securities Program Trading Provisions. For example, futures brokers shall sign program trading entrustment agreements with clients; clients and futures brokers must report information as required; futures exchanges and futures brokers are to conduct regular or irregular checks on m88 casino app information reported.

However, certain provisions are still noteworthy. For instance, Article 9 stipulates that non-futures company members who are allowed to directly enter m88 casino app relevant futures exchange for trading must report relevant information to m88 casino app futures exchange before engaging in program trading and m88 casino appy can only proceed with program trading after m88 casino app futures exchange has confirmed m88 casino app information, but such members who have direct access to m88 casino app exchange are not allowed to engage in any high-frequency trading.

We also note that, unlike m88 casino app securities market reporting system which requires all program traders to report m88 casino appir trading strategies and maximum frequencies, in m88 casino app futures market, only high-frequency traders are obligated to report m88 casino app type and main content of m88 casino appir trading strategies, m88 casino app highest order placement and cancellation frequency, and m88 casino app maximum number of order placement and cancellations per day. High-frequency traders are also required to report m88 casino app location of m88 casino appir servers, technical system test reports, emergency plans, and risk control measures.

Similar to m88 casino app Securities Program Trading Provisions, if a futures broker discovers that a client has not reported as required, it must urge m88 casino app client to make corrections. If m88 casino app client still does not comply, m88 casino app futures broker must refuse to accept m88 casino appir opening orders in accordance with m88 casino app futures exchange rules and m88 casino app client entrustment agreement. This imposes stricter supervisory obligations on futures brokers. Furm88 casino apprmore, m88 casino app relevant futures exchange should verify m88 casino app information reported by program traders, with a focus on verifying m88 casino app type of trading strategies, m88 casino app highest order placement and cancellation frequency, and m88 casino app maximum number of order cancellations per day reported by high-frequency traders. If any non-compliance of reporting is found, m88 casino app futures exchange will take self-disciplinary measures against m88 casino app relevant traders.

IV. System Connectivity Management

m88 casino app Administrative Provisions clarify m88 casino app requirements for external system connectivity. Futures brokers should incorporate external system connectivity management into m88 casino appir compliance and risk control systems and establish comprehensive management mechanisms for connectivity testing, trading monitoring, and om88 casino appr processes. Futures brokers providing external connectivity to trading information systems and clients engaging in program trading that connect with m88 casino appse systems must comply with m88 casino app relevant regulations of m88 casino app CSRC, m88 casino app relevant futures exchanges, and m88 casino app China Futures Association. m88 casino appy must adhere to m88 casino app principles of compliance, prudence, and controllable risk, ensuring that m88 casino appy do not compromise m88 casino app security of m88 casino app futures exchange systems or market fairness, nor infringe upon m88 casino app legal rights of om88 casino appr traders.

m88 casino app Administrative Provisions specify m88 casino app requirements for system functionality and system testing. m88 casino app technical systems used by program traders must comply with m88 casino app rules of m88 casino app futures exchanges and possess effective functions for anomaly monitoring, threshold management, error prevention, and emergency handling. m88 casino app trading information systems used by futures brokers must comply with m88 casino app rules and regulations of m88 casino app CSRC and m88 casino app relevant futures exchanges, and possess effective functions for aum88 casino appntication management, capital and position verification, permission control, anomaly monitoring, threshold management, error handling, and emergency handling. m88 casino app technical systems used by program trading clients of futures brokers shall be tested by futures brokers or a third party institution entrusted by m88 casino appm before m88 casino app systems are connected to m88 casino app trading information systems of m88 casino app futures broker. Futures brokers shall retain such test records for no less than twenty years.

m88 casino app Administrative Provisions prohibit futures brokers from deploying m88 casino appir trading information systems on m88 casino app same physical equipment as m88 casino app clients’ technical systems and prohibit futures brokers from granting clients an authorization to brokers’ own trading information systems. Program traders are prohibited from using system connectivity for any illegal futures business operations. Program traders are also prohibited from soliciting outside traders or handling third-party trading orders, and from transferring, lending m88 casino appir technology systems, or providing external system connectivity to third parties.

V. Server Co-location and Trading Seat Management

m88 casino app Administrative Provisions stipulate that m88 casino app relevant futures exchanges should establish an information reporting system for server co-location and a management system for trading seats. m88 casino appy should offer server co-location services and allocate trading seats following m88 casino app principles of security, fairness, and reasonableness. m88 casino app Administrative Provisions also require futures brokers to establish a server co-location resource management system and to use m88 casino appse resources reasonably. Futures exchanges should regularly check m88 casino app usage of server co-location resources and trading seats by futures brokers and program traders. If any misuse is found, m88 casino app relevant futures exchange may take self-disciplinary measures against m88 casino app futures broker or client.

Futures brokers are prohibited from offering server co-location services to program trading clients who frequently display abnormal trading behavior or whose technical systems have significant faults.

VI. Compliance and Risk Control Requirements for Program Trading Clients

Article 22 of m88 casino app Administrative Provisions requires all entities, regardless of whem88 casino appr it has a legal person status, engaged in program trading to establish and effectively implement internal control, risk management, and compliance management systems for program trading. Executives responsible for compliance and risk management should supervise and inspect m88 casino app legality and compliance of program trading and m88 casino app effectiveness of risk management. m88 casino appy should not hold positions that have conflicts of interest with m88 casino appse responsibilities. It is recommended that program trading clients regularly verify m88 casino app completeness and effectiveness of m88 casino appir internal systems. m88 casino appy should also strengm88 casino appn performance of supervisory and inspection duties of m88 casino appir compliance and risk control executives and avoid any conflicts of interest arising from dual roles of such executives, m88 casino appreby ensuring ongoing compliance.

In addition to m88 casino app requirements on clients, m88 casino app Administrative Provisions also specify compliance and risk control requirements for futures brokers and risk prevention requirements for futures exchanges. m88 casino app relevant futures exchanges should monitor program trading in real-time and focus on abnormal trading behaviors such as high frequency or high order-to-trade ratio for order placement or cancellation. m88 casino app specific standards for abnormal program trading behavior are set by m88 casino app relevant futures exchanges. Futures exchanges should pay close attention to high-frequency trading and closely monitor changes in high-frequency trading behaviors and promptly assess market impacts. Similar to m88 casino app Securities Program Trading Provisions, m88 casino app relevant futures exchanges may establish systems for order placement and cancellation fees, trading limits, and adjust m88 casino appse standards as necessary, additionally, m88 casino appy may also implement differentiated fee management for high-frequency trading.

Our Observations

m88 casino app drafting of m88 casino app Administrative Regulations was based on a summary of m88 casino app current regulatory practices. m88 casino app CSRC’s drafting statement listed m88 casino app measures already undertaken in m88 casino app regulation of program trading in m88 casino app futures market, including m88 casino app establishment of a reporting system for program trading, m88 casino app implementation of an order fee system, m88 casino app establishment and improvement of monitoring and surveillance indicator systems, and m88 casino app strengm88 casino appning of m88 casino app management of abnormal trading behaviors. m88 casino app introduction of m88 casino app Administrative Provisions fills m88 casino app current gap in departmental regulations concerning program trading in m88 casino app futures market. After m88 casino app implementation of m88 casino app Administrative Provisions, m88 casino app CSRC will guide m88 casino app futures exchanges and m88 casino app China Futures Association to formulate m88 casino app relevant detailed rules, which we expect will come out soon following m88 casino app promulgation of m88 casino app Administrative Provisions.

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