China Banking Regulatory Commission, Guidelines on the Participation in Stock Index Futures Trading by Trust Companies
中国银行业监督管理委员会信托公司参与股指期货交易业务指引
September 03, 2011 | BY
clpstaff &clp articles &Trust companies allowed to trade stock index futures.
Main contents: To directly or indirectly participate in stock index futures trading, a trust company shall obtain the approval of the CBRC and the business qualifications for stock index futures trading (Article 2). Trust companies' own businesses may not participate in stock index futures trading. The pooled trust businesses of trust companies may participate in stock index futures trading for hedging and arbitrage purposes, while the single trust businesses of trust companies may participate in stock index futures trading for hedging, arbitrage and speculation purposes (Article 3).
To apply for the business qualifications for stock index futures trading, a trust company shall have obtained Grade 3C or above in the most recent annual regulatory rating. To apply to engage in stock index futures trading for the purpose of speculation, it shall have obtained Grade 2C or above in the most recent annual regulatory rating and have engaged in the hedging or arbitrage business for at least one year (Article 4).
Where a pooled trust scheme of a trust company participates in hedging transactions, the total value of stock index futures sale contracts held at the end of any trading day may not exceed 20% of the total market value of equity-type securities held by the pooled trust scheme, and the total value of stock index futures purchase contracts held at the end of any trading day may not exceed 10% of the net value of trust assets (Article 14). Where a single trust of a trust company participates in stock index futures trading, the risk exposure for holding stock index futures at the end of any trading day may not exceed 80% of the net value of the trust assets, and shall comply with the relevant rules of the stock exchange (Article 15).
Where it is provided for in the trust documents, a trust company may engage a third party to provide investment advisory services for its trust business. Such investment advisor shall have a paid-up capital of no less than Rmb10 million (Articles 20 and 21). If a contract is amended for the sake of stock index futures investment, the trust company shall obtain consent from the settlor (beneficiary) according to the agreed manner, and make reasonable follow-up arrangements (Article 25).
Related legislation: PRC Trust Law, Apr 28 2001, CLP 2001 No.5 p.22; PRC Law on the Regulation of the Banking Sector; Measures for the Administration of Trust Companies, Jan 23 2007, CLP 2007 No.5 p.8; and Tentative Measures for the Administration of Trading of Derivatives by Financial Institutions, Feb 4 2004, CLP 2004 No.2 p.37
clp reference:3700/11.06.27promulgated:2011-06-27effective:2011-06-27This premium content is reserved for
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