The China Securities Regulatory Commission has issued for public consultation draft interim measures on the supervision and administration of derivatives trading. The draft would establish a comprehensive regulatory framework for derivatives trading and related activities under the commission’s jurisdiction, covering swaps, forward contracts, non-standardized option contracts and combinations of those products. It is intended to implement the Futures and Derivatives Law and broader policy requirements to strengthen oversight, contain risk and support orderly development of the derivatives market. The draft clarifies the scope of application, the market’s risk management and resource allocation functions, and basic principles for participation. It also sets out conditions and procedures for developing derivatives contracts, core trading rules, performance assurance arrangements, investor suitability standards, monitoring and surveillance requirements, cross-market supervision, prohibited and restrictive conduct, and oversight of derivatives operating institutions and market infrastructures including trading venues, clearing institutions and trade repositories. Compared with the version consulted on in 2023, the revised draft incorporates feedback and further refines business rules, expands requirements on internal management, risk management and compliance for derivatives operating institutions, broadens supervisory tools and specifies legal liabilities in greater detail. The commission will further revise the draft in light of consultation feedback and then complete the relevant procedures before issuing and implementing the measures.

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