Comment On The Case Of Futures Disputes Between FAN And YINJIAN Company

Because of its unique function of risk avoidance and price discovery, futurestrading has greatly promoted the development of the market economy.But at the sametime, the futures market is a high-risk market, therefore, forced liquidationgeneratesas an important risk control system and plays a major role.However, to some extent,forced liquidation limit rights of investor,and may even cause losses,thus there aremore and more disputes. In this case,the Futures Company compulsorily closed theposition of FAN, causing damage to FAN. FAN accordingly sued the FuturesCompany to bear the responsibility for compensation.After the first trial, the secondtrial and retrial, responsibilityultimately commuted to the Futures Company by theSupreme People’s court.The main focuses of controversyin this case is:1.Whether it’swrong or right to compulsorily close the position of FAN;2.The standard of losscalculation;3.The principle of burden-sharing.For the three focuses of controversy,the Supreme People’s court established the the standard of fault identification and theprinciple of loss calculation and allocationof responsibilities.On the issue of faultidentification, The Futures Company shall not arbitrarily increase the margin ratio ofFAN and should give a reasonable time for FAN.On the issue of loss calculation, thereference point to calculate must be prior to the time when forced liquidation tookplace.At the same time, we should consider FAN’s transactions from opening day tothe ending of forced liquidation, etc. The Futures Company and FAN should bear theloss according to their fault.Visibly, in regard to fault determination and losscalculation in the disputes triggered by forced liquidation, a comprehensive analysisof futures transaction process is required.The basic principle of the duty configurationis the fault principle rather than simply taking a party’s litigation request or subjectivejudgment.