CHINA Law and Practice Contributed by: TieCheng Yang, Yin Ge, Lin (Avery) Huang and Weijun (Elliot) Yi, Han Kun Law Offices
b) Shanghai Clearing House (SHCH) SHCH, established in 2009 under PBoC leadership, serves as the designated central clearing counter - party (CCP) and clearing house for a broad array of interbank derivatives – including interest rate, for - eign exchange, bond forward, credit and commodity products. SHCH develops and enforces standardised clearing rules, margin methodologies, and default and risk management procedures, and it interfaces with both domestic and cross-border markets. c) China Securities Depository & Clearing Corporation (CSDC) For exchange-based bond and equity derivatives, CSDC acts as the central counterparty. CSDC is responsible for centralised registration, custody, clearing, settlement and netting of all exchange-based securities and derivatives. Exchanges CFFEX is China’s dedicated venue for trading finan - cial futures and options. Other commodity exchanges, including DCE, ZCE, SHF, INE and GFEX, provide cen - tralised trading and clearing for futures and options linked to metals, energy, and agricultural and industrial products. SSE and SZSE are China’s primary equity markets and also support the trading of listed ETF options. All futures and stock exchanges are regulated by CSRC. Additionally, SGE, established with State Council approval and overseen by PBoC, serves as a spe - cialised financial market for trading gold and other precious metals as well as the OTC trading platform for derivatives relating to them.
ates under the guidance of CSRC. CFA is responsible for the self-regulation of derivatives activities carried out by futures companies and their risk management subsidiaries. CFA formulates and implements industry rules relat - ed to futures business. It conducts supervision and inspections of futures companies and their subsidiar - ies, organises self-regulatory reviews, and promotes investor education and protection to support the sound and compliant development of the derivatives market. c) Asset Management Association of China (AMAC) AMAC, governed by laws under CSRC, serves as the self-regulatory organisation specifically for the fund industry. Its members are primarily publicly offered and private fund managers, as well as custodian banks for funds. AMAC regulates the use of deriva - tives by private investment funds. d) National Association of Financial Market Institutional Investors (NAFMII) NAFMII is the self-regulatory organisation for China’s interbank market, operating under the supervision of PBoC. Its mandate covers a wide range of interbank markets, including the bond market, interbank lend - ing market, foreign exchange market, bill market, gold market and derivatives market. NAFMII is responsible for formulating standard docu - mentation for financial derivatives transactions in the interbank market, overseeing the filing of executed master agreements, and administering the filing of internal operational procedures and risk management frameworks related to derivatives activities. Independent Authorities a) China Central Depository & Clearing Co., Ltd. (CCDC) CCDC functions under MOF as the central securities depository for China’s interbank bond market. CCDC plays a foundational role by registering, supervising and settling fixed income securities – such as govern - ment and corporate bonds. In the interbank market, certain bond trades executed via CFETS are settled through CCDC’s systems.
4. Documentation Issues 4.1 Trading Documentation
4.1.1 Industry Standards and Master Agreements In China, the documentation for derivatives transac - tions generally follows three primary master agree - ment frameworks: those developed by NAFMII, SAC and ISDA. As mandated by PBoC, participants in the interbank market are required to use the China Interbank Market
24 CHAMBERS.COM
Powered by FlippingBook