CHINA Trends and Developments Contributed by: Tao (Andy) Qin, Yanhua (Xavy) Xu, Ran (Addie) Cheng and Tianbing (Yasmin) Zhou, DeHeng Law Offices
venting insider trading and curbing market manipula - tion. Additionally, the clear prohibition of a series of market behaviours will serve as a powerful deterrent against illegal and irregular activities in the market. Fifthly, the investor structure is undergoing profes - sional upgrading, and classified and tiered manage - ment has become the core logic. The Measures for Futures Companies raise the access thresholds for professional investors and allows qualified institu - tions to participate in high-risk businesses. Beyond the existing market traders, listed companies, state- owned enterprises, overseas institutions and other entities will also gradually participate in the market in the future, becoming important participants in the market. Sixthly, technology is empowering the transforma - tion of market infrastructure. Compared with other sectors in the financial field, the futures and deriva - tives industry has relatively low technological content. In recent years, China has successively introduced policies such as the Development Plan for the New Generation of Artificial Intelligence and the Provisional Measures for the Administration of Generative Artifi - cial Intelligence Services, which provide institutional frameworks and technical standards for the applica - tion of AI in the financial field and hold far-reaching significance for upgrading the operation and devel - opment model of the futures industry. For instance, AI can dynamically monitor market transaction infor - mation; when combined with blockchain technol - ogy to ensure transaction security, it can effectively prevent behaviours such as fraudulent transactions. Moreover, with the relaxation of the business scope of futures companies, AI and big data can promote the standardisation, popularisation and personalisation of futures companies’ service models through meth - ods such as analysing “transaction records” and “risk preferences”. In the future, the application of digital technology and the reserve of technological talents may reshape the competitive landscape of the futures industry.
Lastly, the internationalisation process is moving towards institutional opening-up. In recent years, affected by factors such as international trade pro - tectionism, local war conflicts and climate change, global economic volatility has intensified, leading to a significant increase in demand for risk management. Consequently, the global trading volume of deriva - tives has risen sharply, and their functions of price discovery, risk management and resource allocation have become an international consensus. On one hand, China’s laws and regulations encourage for - eign capital to participate in China’s capital market while continually increasing efforts in product inno - vation and allowing futures companies to engage in more overseas businesses. On the other hand, due to the complexity of regulatory frameworks involved in foreign-related transaction procedures, existing laws and regulations still mostly remain limited to princi - pled provisions regarding international transactions. China is still consistently improving futures systems and rules to further align with international standards. To sum up, the institutional framework formed by the Futures and Derivatives Law and a series of regula - tory measures is systematically reshaping the futures and derivatives markets ecosystem through strength - ening leading competition, solidifying talent support, deepening services for the real economy, rigorously ensuring compliance and transparency, upgrading the investor structure, injecting technological impetus and advancing alignment with international standards. This process is not only the inevitable concomitant of the market’s transition from “scale expansion” to “quality improvement”, but also lays a solid founda - tion for it to better respond to global risks, empower industrial chain upgrading and support the high-qual - ity development of the capital market. It will drive Chi - na’s futures and derivatives markets towards a more mature stage of development while striking a balance between compliance and innovation.
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