Civil liability for futures trading

Author: Wu Qingbao
Publisher:
Publish Date: 2003-08-01
Features: In the field of civil and commercial law, the legal system primarily includes laws such as the Judicial Law, Securities Law, Bankruptcy Law, Negotiable Instruments Law, Futures Law, Trust Law, and Banking Law. Most of these laws have been formulated and improved, except for the Futures Law, which remains uncertain. Around 1996, the National People's Congress organized the drafting of a Futures Law draft. However, due to the prolonged instability in the governance of the futures market that followed, futures legislation was suspended. The State Council only promulgated the Provisional Regulations on the Administration of Futures Trading in June 1999, which far failed to meet the needs of a sound and developing futures market.
China has had securities and futures markets since the implementation of the market economy. From the listing of futures contracts on the Zhengzhou Commodity Exchange in 1991 to the present, China's futures market has gone through 11 years of development. Over these years, futures exchanges declined from over 50 during their peak to 15 after the 1994 second round of reforms, and now stand at three (Shanghai Futures Exchange, Dalian Commodity Exchange, and Zhengzhou Commodity Exchange). Futures trading institutions have also shrunk from over 1,000 to fewer than 200. After the initial phase of blind expansion in the pilot stage, the futures market entered a period of cleanup and regulation due to insufficient conditions for its development.
In 2000, with the inclusion of "steady development of the futures market" in the National 15th Five-Year Plan and the Central Financial Work Conference clarifying the need to regulate and develop the futures market, the market emerged from its long period of cleanup and regulation, entering a new phase of steady development. As a risk management market, the futures market has begun to fulfill its fundamental economic functions of hedging risks and discovering prices, and society, including industrial sectors and decision-makers, has come to recognize this more and more. With China's entry into the WTO, the futures market will gradually open up. Various types of foreign investors will gradually participate directly or indirectly in China's futures market, and futures trading rules will accelerate their internationalization.
Against the backdrop of changing market participants and increasing influence from international standards, the new challenges before us are how to improve and perfect futures market legislation and judicial work, and how to better protect the legitimate interests of domestic and foreign investors. Since 2001, the China Securities Regulatory Commission has revised four original Administrative Measures in line with the principles of "marketization, legalization, and internationalization" in futures supervision. At the same time, it has actively promoted the revision of the Provisional Regulations on the Administration of Futures Trading and the legislative research for the Futures Law, aiming to create a more favorable development environment for the futures market.
In developed countries, securities and futures markets hold equally important positions in national economic development. In fact, in countries like the United States and other Western developed nations, futures markets are far larger than securities markets, with securities market size accounting for less than 40% of futures market size. Futures contracts cover a wide range of sectors, including general commodities, finance, foreign exchange futures, stock index futures, and options, providing excellent opportunities for trading and risk management for governments, enterprises, and other investors. A sound futures legislation system has effectively promoted economic development.
China must increase the variety of futures trading products and gradually develop foreign exchange futures, stock index futures, and other contract types for listing. To achieve this, it is essential to formulate comprehensive laws to ensure the healthy development of the futures market and advance reform and opening-up. The futures market is an advanced form of the market economy, and sound credit construction is a crucial foundation for its establishment, operation, and development. From a long-term perspective, it is necessary to learn from the experience of credit system construction in the securities market and promote credit building through legislation.
Given the characteristics of futures contract trading, such as the use and management of trading margins, trends in market prices, and the disclosure of information, all market participants must maintain a strong sense of integrity, adhere to market credit standards, strictly fulfill their credit obligations, and restrain their market behavior. Based on historical experience and lessons, to prevent the recurrence of fraudulent activities, it is essential to vigorously build a market credit system and ensure the standardized development of the futures market through legislation.
In summary, futures legislation is imperative. However, due to the limited number of proposals on strengthening futures legislation submitted by individual representatives or members during the annual National People's Congress and Chinese People's Political Consultative Conference sessions, the push for such legislation has been insufficient. At the same time as the Supreme People's Court's Interpretive Rules for the Administration of Judicial Interpretations on Futures Disputes are being implemented, we stand at the forefront of futures legislation, closely aligning our research with the spirit of these interpretive rules. We study and explore the current legal responsibilities in the futures market from the perspective of understanding and applying these interpretive rules, remaining true to their essence while not being confined to their provisions. Our research covers all legal responsibility issues that have emerged or may emerge in the development of the futures market in the current and near future.
In other words, our task and responsibility are to promptly identify legal issues in the futures market, conduct timely research, and propose our preferred solutions, all in an effort to advance futures legislation and promote the prosperity and development of the futures market.
The authors participating in this research project are mostly involved in the drafting and deliberation of the interpretive rules. They include the head and drafters of the futures interpretive rules project, as well as leaders and experts from the regulatory authorities of the futures market. They have made unique contributions and achievements in futures legal research, judicial practice, judicial studies, and theoretical research on the futures market, fully ensuring the quality of this research project. It will serve as a significant reference in both the legal and futures industries and maximize its positive guiding role.
We would like to specially thank Mr. Yang Maijun, Director of the Futures Department of the China Securities Regulatory Commission, for serving as the advisory editor for this book. We also thank Judge Jia Wei of the Supreme People's Court for providing relevant materials. Our gratitude goes to Ms. Cui Guohong and Mr. Ma Hongtao for their assistance in gathering materials for the book. We also extend our thanks to Mr. Zhao Feng, Deputy Director of People's Justice, Ms. Li Guohui, reporter of Legal Application, Ms. Dou Yumei, reporter of People's Courts, and Mr. Pan Haitian, reporter of China Securities Journal, for their support in the writing of this book. We believe that the publication of this book will positively advance the research and practical application of futures legislation and futures business. At the same time, we apologize for any errors or omissions and welcome timely corrections.