The Analysis On The Futures Legal System Of China And The Suggestions On Improving The System

Futures trading is the advanced outcome developed from the forward contract based on actual goods dealing when the market economy has grown to a certain level while the commodity producers were trying to evade the price risks. Since the futures market was set up in the early 90's of last century in China, the following seventeen years witnessed its development from simple commodity futures to financial futures and options trading; the legal system accordingly in this sector has been gradually improved from absence with the development of futures market. In recent years with the deepening of reformation and opening-up in financing sector, the Chinese futures market is accelerating year by year its steps of integration with international market. The points of view on this market by all walks of life come to consensus from blurriness to clearness; this field experienced the government policies from the initial support of market establishment to the containment of irregular growth at the first stage the second stage, and the limitation and regulation at the second stage till the present measures which are being taken to construct and improve in all respects the relevant legal system, and speed up to issue systematic rules as well as to encourage innovation of futures products; all these show that the Chinese futures industry is in booming season and is confronted with a rare chance of development. The State Council issued in March 6, 2007 the Rules of Management on Futures Trading, which was implemented on April 15. Then the China Securities Regulatory Commission issued 8 departmental regulations within the following few weeks, including the Management Method of Futures Exchanges, Management Method of Futures Companies, Management Method of Futures Employees, Management Method on Employment Qualification of Board Members, Supervisors and High-level Managerial Staff of Futures Companies, Trial Management Method on Monitoring Risk Indicators of Futures Companies, Trial Method of Financial Futures Accounting Affairs of Futures Companies, Trial Management Method of Indemnificatory Fund of Futures Investors, Trial Method of Intermediary Business Offered by Security Companies for Futures Companies. It was unprecedented in China that the administrative regulations were published so concentratedly within so short period. It showed not only that the government attached importance to this field, but also meant that there was the urgent necessity for the Chinese futures market to be properly and legally regulated when it was standing on the key historical turning point.The futures trading is characterized by standardization of contract, bi-way trading and hedging system, leverage mechanism and highly organized market. As a high risk and professional trading behavior, the risks existing in the course of trade are technical, which are assumed to be undertaken by the investors themselves on the principle of equality and voluntary. The legal regulation to the market and the protection to the investors by the country belong to the jurisdiction aspect, which is to be explored here. The premise to guarantee the investors to trade under conditions of fairness, justness and equality is to establish an efficient, perfectly monitored and exercised legal system.This article takes the Management Rules of Futures Trading as the core by integrating its accessory regulations to analyze the three-leveled management system of present Chinese futures market and the progress in legal construction aspects compared with the previous system; it further points out the aspects to be improved in this specific system on the consideration of the Chinese economy situation and put forward some suggestions.