Enhanced Regulatory Oversight to Boost Futures Market Growth

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On 11 October, the China Securities Regulatory Commission, National Development and Reform Commission, and Ministry of Industry and Information Technology, along with four other departments, jointly issued a new policy, titled Several Opinions of the State Council on Strengthening Regulation, Preventing Risks and Promoting the High-Quality Development of the Futures Market (the Opinions). The Opinions outline 17 key measures across eight areas, including enhanced regulation, risk prevention, and market openness.

From its origins in 1990, China's futures market has experienced robust growth over the past three decades, and now encompasses over 140 futures and options products across major economic sectors. In 2023, the total trading volume of the national futures market reached RMB 56.85 trillion, reflecting a year-on-year increase of 6.28 percent. Despite its already substantial size, the futures market still has potential to play a more active role in supporting national development strategies and strengthening China’s agricultural, manufacturing, and low-carbon sectors.

The Opinions set clear development goals for China’s futures market across three phases: by 2029, 2035, and mid-century. The immediate goal for 2029 emphasises enhancing regulatory capabilities and aligning product offerings with national economic priorities, as well as improving market depth and pricing power. Just like other recent financial policies, the Opinions call for comprehensive regulatory enhancements to mitigate market risks, which is essential for establishing a world-class futures exchange by the middle of the century.

In terms of trading practices, the Opinions stipulate strict implementation of real-name account registration, optimised management of accounts under actual control, and improved large-holder reporting rules to ensure transparent regulation. Furthermore, they call for comprehensive oversight of futures companies, in everything from corporate governance and business operations to equity and risk management. The document also underscores a stringent crackdown on speculative trading and market manipulation to prevent the emergence of risk factors.

Experts suggest that the Opinions could encourage futures companies to innovate their business models to better meet diverse market demands, which would present numerous opportunities. As Chinese futures exchanges have gradually begun to expand their global influence, international operations are expected to be an increasingly important profit growth point for domestic futures companies.