On December 24, 2020, China Financial Futures Exchange (CFFEX) releases the Measures of China Financial Futures Exchange on Risk Control (the “Measures”). The Measures refines and perfects the definition of extraordinary situation in the course of futures trading and relevant emergency actions can be taken by the Exchange. The Measures will take effect on December 25, 2020.

The amendments are mainly to provide rule-based support for settlement risk segregation of futures market. Under the overall leadership of China Securities Regulatory Commission (CSRC) and taking into account of various market opinions, CFFEX has comprehensively studied and sorted the emergency actions can be taken by the Exchange when settlement, delivery, exercise, assignment and other business cannot be normally carried out due to extraordinary situations, and it has refined and perfected relevant provisions on emergency actions in mitigating risks. In the case of force majeure events or IT system failure, the Exchange will support its members in current day settlement and next day normal trading by taking emergency actions, releasing emergency clearing data, among others, which can effectively prevent the spread of settlement risk in futures market. The implementation of the Measures will provide more comprehensive support for settlement risk segregation of futures market, which is conducive to the rapid resolution of extraordinary situations, such as IT system failure, and to the safeguard of the normal and orderly market operation.

Guided by the spirit of the fifth Plenary Session of the 19th CPC Central Committee, CFFEX will follow the fundamental principle of firmly guarding against systemic risks, steadily promote the segregation of trading and settlement in the futures market, effectively prevent and mitigate market risks, to enhance the steady and healthy development of the financial futures market.

December 11, 2020, China Financial Futures Exchange (CFFEX) releases the Detailed Clearing Rules of China Financial Futures Exchange (Amended) and the Guidelines of China Financial Futures Exchange on Using China Government Bonds as Margin (Amended). The amended rules will take effect on December 14, 2020.

Since China government bonds (CGBs) was accepted as margin by CFFEX nearly six years ago, relevant business operation has been running smoothly, the market scale has been growing steadily, and the transaction cost has been effectively reduced, all of which has been widely acknowledged by various parties in the market. In order to strengthen the risk management framework against default, under the overall guidance of the China Securities Regulatory Commission (CSRC), and after extensive researches, consultations and studies, CFFEX further improves the disposal mechanism of CGBs posted as margin to better suit the tiered-settlement system of the financial futures market. The disposal mechanism is not only a guarantee measure against default or to enhance efficiency, but also an improvement on the Exchange’s clearing rules regarding CGBs as margin.

After officially implements the revised detailed clearing rules and business operation guidelines, CGBs could be disposed by auctions, negotiated sale and regular sale through the collateral disposal platform of China Central Government Securities Depository and Clearing Co., Ltd. The industry believes that it will significantly improve the disposal efficiency of CGBs posted as margin and enhance CFFEX's ability to quickly and effectively deal with default risk of Clearing Members.

Next, CFFEX will continue to fully implement the CSRC’s principle of "Four Awes" and "One Synergy", improve the relevant rules and market operational efficiency, optimize market services, enhance risk management capabilities, cooperate with all parties in the market to further promote the coordinated development of the financial market, and effectively serve the real economy.