Study On The Problems Concerning Mandatory Liquidation Of Futures Trading In Our Country

Futures trading which past about one and half centuries in this world is the inevitable result of the economic development nowadays. It's beyond a shadow of doubt that futures will advance the economy with the function of risk-avoided and price-discovered. However, futures market is the place where is full of high-hazard and high returns. Mandatory liquidation as one of legal systems controlling market risks plays an increasing role. Mandatory liquidation as one of legal systems controlling market risks plays an increasing role. Mandatory liquidation means that Futures Exchange or Futures Company liquidate forcibly the futures position (namely, making the futures contracts in the reverse direction check out.) when member's or client's deposit cannot meet the requirement and complement in time, or breaks the law or rules, or Futures Exchange or Futures Company hopes to avoid the enlarging danger of market risks in some special circumstances. The causes of being liquidated are varied. Most cases are that the deposit falls short of requirements. In fact, the legal nature that was not coded in exiting law or rules should be defined as a kind of power of Futures Exchange or Futures Company. In practice, the dispute is increasingly raising. Especially, questions concerning the qualification, limitation, procedure, share of losses and allotment of responsibility in judicial trial becomes the focus after mandatory liquidation.Futures trading have many traits such as contract standardized, trading centralized, round trip and hedging mechanisms, particular commodity, virtual transaction and margin system. The implementing bodies have Futures Exchange and Futures Company. Mandatory liquidation is a kind of power. This power cannot be abandoned or transferred, otherwise, the implementing bodies will bear concerning legal liability. The main conditions of mandatory liquidation include:the standard of margin of member or client under the legal standard or conventional standard, illegal actions or breaking the rule of trading, critical forward quotation etc. Firstly, the implementing bodies should agree on the standard of margin with the opposite sides ,Secondly, fulfill the obligation of notice, if member or client don't underweight or supplement the margin by itself at the limited time, In the end, mandatory liquidation will occur.On the principal of risk in accordance with reward in the process of mandatory liquidation, It conforms to the trait of futures trading that taking the fault principle and doctrine of presumption as the fundamentals to allocate responsibility, which is beneficial to make two parties' the rights and obligations clear, decide loss participation and specify the action between the parties.