To further enhance market liquidity and promote the functioning of the financial futures market, the China Financial Futures Exchange (CFFEX) released the Measures of China Financial Futures Exchange on the Management of Market Makers (the “Measures”) on December 28, 2018. The Measures took effect on the same day.

The market maker system is an important, foundational element of the exchange-traded derivatives market, and a crucial means of enhancing market liquidity and efficiency. The Measures contain detailed provisions on the management of market makers, covering eligibility criteria, market making transactions, rights and obligations, as well as supervision, thus laying the groundwork for the introduction of market makers to certain financial futures contracts.

A CFFEX official in charge of the program explained that the Measures were designed to increase market liquidity, prevent price spikes and promote the reasonable pricing of relevant products, thus contributing to a more effective, well-functioning and stable financial futures market. The Measures were developed based on intensive study of similar regimes of domestic and foreign exchanges and extensive market surveys. Following the release of the Measures, CFFEX will introduce market makers to certain financial futures contracts at the appropriate time under the guidance of the China Securities Regulatory Commission. It will supervise market makers to operate in a lawful and compliant manner, thus safeguarding the stable functioning of the financial futures market.