Linklaters advised the Futures Industry Association (FIA) and its members, comprising international banks, international exchanges, Chinese banks and futures exchanges on their submission to the Standing Committee of the National People’s Congress (NPC) on the newly released draft futures law consultation.
The proposed futures law represents a milestone in providing a comprehensive legal and regulatory framework governing the operation of the futures markets in mainland China. The new law sets out rules for futures trading, clearing and settlement as well as the effective supervision of exchange participants, clearing houses, investors, trading and clearing members.
The draft futures law also extends to the operation of over-the-counter derivatives (including centrally-cleared and uncleared derivatives) and provides protection for the enforceability of close-out netting and collateral arrangements.
In addition to welcoming the policy objectives and provisions, FIA sets out the key observations and considerations on the draft futures law, in areas including finality for trading, settlement and default management measures in relation to futures transactions, client clearing for futures transactions, central clearing of OTC derivatives transactions and cross border application, in its submission to the NPC.
The Linklaters team was led by structured finance and derivatives partner Chin-Chong Liew, with support from counsel Simon Zhang and managing associate Ying Zhou.
Partner, Chin-Chong Liew, commented:
“After nearly 30 years of hiatus, mainland China’s futures market will finally secure much-anticipated legislation providing legal protection for a stable and healthy development of the market. We believe that the new law will provide a solid foundation for foreign participation in the growing Chinese futures markets as well as Chinese houses’ participation in the international markets. We are proud to have had the opportunity to play our part in working closely with FIA and supporting its members on their submissions of key considerations to the draft futures law.”
Linklaters’ leading structured finance and derivatives team is known for their innovative and market-leading transactions. The team continuously delivers solutions for structurally complex deals that help clients navigate the ever-changing nature of financial regulation and markets in China and across Asia. Recent transactions included advising Shanghai Clearing House and a number of global banks on close out netting of derivatives transactions including amendment to ISDA, GMRA and other derivatives documentation, and advising the Chinese futures exchanges on their internationalisation initiatives and offshore market participants on their participation in the onshore futures tradings.
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