The corporate culture can be summed up into “Three Faith and Five Spirit” search
English
China futures News
China futures News
Home > China futures > China futures News > Designated Settlemen...

Designated Settlement Banks Management Rules of the Shanghai International Energy Exchange

Date:08 12, 2015 Author:Admin

Chapter 1

General Provisions

Article 1 These Rules are formulated in order to regulate the futures margin depository business of the Shanghai International Energy Exchange (the “Exchange”), and ensure the safekeeping of the futures margin and the stable operation of the futures trading, pursuant to the relevant laws and regulations, the relevant provisions of regulatory authorities and the General Exchange Rules of the Shanghai International Energy Exchange.

Article 2 The Exchange shall, in accordance with the principle of prudence, designate settlement banks (“Designated Settlement Banks”) that engage in futures margin depository business, and shall, pursuant to these Rules, effectively supervise Designated Settlement Banks and require the Designated Settlement Banks to conduct the futures margin depository business in accordance with applicable laws and regulations.

Article 3 Designated Settlement Banks that engage in futures margin depository business shall comply with laws, administrative and ministerial regulations, and applicable rules of the Exchange, and accept the supervision of the Exchange.

Chapter 2

Application

Article 4 Futures margin depository business with the Exchange is classified into margin depository business for domestic Clients and margin depository business for overseas Clients.

Margin depository business for domestic Clients refers to the margin depository business related to Members and their domestic Clients, while margin depository business for overseas Clients refers to the margin depository business related to Overseas Special Participants, Overseas Intermediaries, and/or overseas Clients.

Article 5 A banking financial institution that applies for the qualification to conduct futures margin depository business shall, at all times, meet the following criteria:

1. being a nationwide banking financial institution with legal person status that is established in the PRC;

2. complying with the requirements of capital adequacy ratio, liquidity, asset-liability ratio and as otherwise prescribed by the banking regulatory authorities of China on banking financial institutions;

3. having sound systems of corporate governance, risk management and internal control;

4. having a dedicated unit or department for the futures margin depository business;

5. having a robust futures margin management system, internal management rules and operating procedures related to futures funds settlement, and business contingency plans for abnormal circumstances such as technology and communication system failures;

6. having facilities and technical competences to conduct the futures margin depository business and to support the monitoring of the safekeeping of futures margin, a nationwide fund transfer system that has operated stably and efficiently for the recent three (3) years, a real-time internal fund transfer system, and a sound nationwide centralized bank-futures fund transfer system;

7. having an outlet (such outlet is thereafter referred as a “Designated Branch”) established within a certain distance to the venue as prescribed by the Exchange to undertake the futures margin depository business and futures funds settlement related business. No less than three (3) personnel at the Designated Branch shall have passed the futures business practitioner professional qualification examinations of the PRC, and all the personnel at the dedicated futures settlement counter shall have passed such examinations. The managers of such Designated Branch shall also have no less than five (5) years of work experience in banking financial institutions;

8. having no record of major violation of laws and regulations, no major accident or major administrative sanction imposed by any regulatory authority, in the recent three (3) years;

9. having neither pending litigation nor outstanding debts that may cast material impact on its credit standing; and

10. any other requirements prescribed by the Exchange.

Article 6 A Designated Settlement Bank that applies for margin depository business for domestic Clients shall satisfy the requirements prescribed in Article 5 of these Rules and meet the following criteria:

1. having a registered capital of no less than RMB 10 billion, and having been consecutively profitable in the recent three (3) financial years;

2. having total assets of no less than RMB 1.5 trillion and net assets of no less than RMB 100 billion; and

3. having no less than 600 outlets in the PRC.

Article 7 A Designated Settlement Bank that applies for margin depository business for overseas Clients shall satisfy the requirements prescribed in Article 5 of these Rules and meet the following criteria:

1. having a registered capital of no less than RMB 5 billion and having been consecutively profitable in the recent three (3) financial years;

2. either having total assets of no less than RMB 1.5 trillion and net assets of no less than RMB 100 billion, or having total assets of no less than RMB 30 billion and net assets of no less than RMB 5 billion, with its holding company having total assets of no less than RMB 1.5 trillion (or its equivalent in foreign currency) and net assets of no less than RMB 100 billion (or its equivalent in foreign currency); and

3. being a direct clearing member of the related real-time gross settlement system(s), or having correspondent relationship with direct clearing members of such system(s), to ensure efficient real-time fund transfer. The Designated Settlement Bank or its holding company shall have branches established in more than three (3) global or regional financial centers that can support futures margin depository business and fund settlement-related business.

Article 8 A banking financial institution that applies to become a Designated Settlement Bank to conduct related business shall submit the following documents for preliminary review:

1. the Designated Settlement Bank application form (template available at the official website of the Exchange), an application letter, a feasibility report and a business plan;

2. a description of outlets, the Designated Branch(es) and the facilities required to conduct the futures margin depository business;

3. the futures margin depository management rules, internal management rules, as well as related business contingency plans;

4. a description of the roles and responsibilities of the futures margin depository business department, a list of staff, as well as the resumes of managers and staff respectively;

5. a written commitment to comply with the relevant provisions of monitoring the safekeeping of futures margin;

6. the latest corporate annual report published pursuant to the requirement of the State Administration for Industry and Commerce;

7. the financial license and the business license of the Designated Settlement Bank, and the business license of the Designated Branch(es);

8. the proof of passing the futures business practitioner professional qualification examinations by staff at the Designated Branch(es);

9. audit reports and internal control evaluation reports of the recent three (3) years;

10. the power of attorney by the legal representative (template available at the official website of the Exchange) and identity documents of the staff who submit the application; and

11. other documents prescribed by the Exchange.

Article 9 Upon receipt of full application documents of Designated Settlement Bank in compliance with the requirements, the Exchange shall complete the preliminary review on the application within twenty (20) trading days.

Article 10 An applicant that has passed the Exchange’s preliminary review on its application shall, pursuant to the requirements of the Exchange and the China Futures Margin Monitoring Center Co., Ltd (“CFMMC”), pass the tests or examinations of relevant business, technology, and communications equipment, and further submit the following documents to the Exchange:

1. documentary proof issued by the CFMMC for passing the data reporting test with respect to the monitoring of safekeeping of futures margin;

2. the report of bank-futures fund transfer system and BECK system testing with futures market participants such as Members and Overseas Special Participants; and

3. other documents required by the Exchange.

Article 11 A Designated Settlement Bank shall, within three (3) working days upon the approval by the Exchange, report to the competent banking regulatory authority of such approval.

Article 12 A Designated Settlement Bank shall, prior to the commencement of the futures margin depository business, enter into a written agreement with the Exchange on the futures margin depository business (the “business agreement”), specifying the rights and obligations of each party.

Chapter 3

Rights and Obligations

Article 13 Designated Settlement Banks are entitled to the following rights:

1. opening the dedicated settlement account for the Exchange, dedicated margin accounts for Members, futures settlement accounts for Overseas Special Participants, Overseas Intermediaries and Clients, and other settlement-related accounts prescribed by the Exchange;

2. accepting deposits from entities such as the Exchange, Members, Overseas Special Participants, Overseas Intermediaries and Clients; and

3. obtaining information from the Exchange of the credit standing of entities such as Members, Overseas Special Participants, Overseas Intermediaries and Clients, which is related to the futures business with the Exchange.

Article 14 Designated Settlement Banks shall provide futures margin depository services in a safe, accurate and timely manner, and shall perform the following obligations:

1. executing fund transfer instructions, bills or electronic, issued by the Exchange and Members with priority, and providing prompt feedbacks to the Exchange of the execution results and related changes of the account;

2. completing FX conversion related to the futures trading in compliance with relevant regulations in a timely manner .

3. accepting supervision by the Exchange on the futures margin depository business;

4. keeping confidential the business information of the Exchange, Members, Overseas Special Participants, Overseas Intermediaries and Clients; and

5. assisting the Exchange to mitigate risks in event of significant risks;

Article 15 A Designated Settlement Bank shall have branch(es) or sub-branch(es) established in the location where futures margin depository business is conducted.

The Designated Settlement Bank shall set up a dedicated futures settlement counter at the Designated Branch to provide exclusive services to the Exchange and its Members.

Article 16 If the Exchange changes the trading and clearing hours, Designated Settlement Banks shall adjust their business hours accordingly to meet the operational requirement of the futures margin depository business.

Article 17 Designated Settlement Banks shall open, change or close the dedicated fund accounts of Members only when the specific notice issued by the Exchange is presented.

Designated Settlement Banks that engage in the margin depository business for overseas Clients shall, in compliance with the relevant regulations prescribed by the People's Bank of China (the “PBOC”) and the State Administration of Foreign Exchange (the “SAFE”), open bank accounts related to futures business for the Exchange, Members, Overseas Special Participants, Overseas Intermediaries and overseas Clients.

Article 18 The transfer of funds related to futures business between the Exchange and a Member shall be executed between the dedicated settlement account of the Exchange and the dedicated fund account of the Member.

Article 19 Designated Settlement Banks shall implement close-ended operation of the futures margin and conduct futures margin deposit and withdrawal via electronic transfers, in accordance with the relevant regulations and rules of the safekeeping of futures margin.

Designated Settlement Banks shall conduct the FX conversion for the Exchange and its Members in compliance with the relevant regulations of the SAFE and requirements of the Exchange, and perform its reporting obligations in accordance with relevant provisions.

Article 20 Designated Settlement Banks shall pay interests to the Exchange at the interest rates negotiated with the Exchange.

Article 21 Designated Settlement Banks shall, in strict compliance with the supervisory requirements of the Exchange, take effective measures to mitigate liquidity risks on margins, and shall not restrict any deposit or withdrawal request from any Member without written consent by the Exchange.

The Exchange may, from time to time, initiate inter-bank transfers of margin held with Designated Settlement Banks to test the safety of margin deposits.

Article 22 With regards to the Exchange’s fund settlement demand in terms of liquidity or otherwise, upon the request by the Exchange, the Designated Settlement Banks shall cooperate with the Exchange accordingly to help mitigate any risks faced by the Exchange which may arise.

Article 23 Designated Settlement Banks shall not assist Members in collateralizing margins for any other purposes and shall not misappropriate Clients’ margin to repay debts of Futures Firm Members, Overseas Special Participants and the Exchange.

Article 24 Designated Settlement Banks shall reject any request by any other entity or individual to freeze or deduct the fund deposited in the dedicated settlement account of the Exchange.

Designated Settlement Banks shall notify the Exchange in advance the intention of any other entity to take actions that may be detrimental to the margin depository business, such as freezing of the funds deposited in dedicated margin accounts of Members.

Article 25 Designated Settlement Banks shall comply with all the rules published or revised by the Exchange with regards to the depository and settlement business of the futures margin.

Article 26 Designated Settlement Banks shall execute fund transfers in accordance with the Exchange’s instructions, bills or electronic, through the BECK system in the following ways:

1. for fund transfer within the same bank, the Designated Settlement Bank shall, upon receipt of the instruction, ensure real-time transfer of fund to the dedicated fund accounts of designated Members;

2. for inter-bank fund transfer, the Designated Settlement Bank shall, upon receipt of the instruction, ensure transfer of fund in the most efficient manner and timely receipt of such funds by the receiving bank; and

3. Designated Settlement Banks may cooperate with other entities to improve the efficiency of fund transfer.

Article 27 Designated Settlement Banks shall, in accordance with the following provisions, conduct reconciliation of the dedicated settlement account for the Exchange on a daily basis:

1. providing prompt feedbacks to the inquiries by the Exchange about the dedicated settlement account balances and movements;

2. conducting prompt reconciliation after daily settlement according to the requirements of the Exchange;

3. delivering to the Exchange transaction evidences such as debit/credit notes or breakdown of fund transfers of the Exchange on the same day; and

4. providing the account statement for the dedicated settlement account as required by the Exchange.

Article 28 A Designated Settlement Bank shall, in accordance with the relevant provisions of monitoring the safekeeping of futures margin, report to the CFMMC relevant information about all futures margin accounts held with the bank, including account balances and movements of the previous trading day, through the leased line within the prescribed time.

Article 29 Designated Settlement Banks shall respond to the Exchange’s inquiry on a real-time basis, and provide to the Exchange the breakdown of balances and movements of dedicated margin accounts of Members.

Article 30 Unless otherwise prescribed by the State laws and regulations, a Designated Settlement Bank shall not, in any manner, disclose to any third party any non-public information related to the futures margin depository business and the entities that participate in the futures trading activities.

Article 31 Designated Settlement Banks shall ensure that their staff are familiar with the rules, requirements and procedures of the futures margin depository and other settlement-related businesses, and shall actively participate in the business trainings organized by the Exchange and arrange internal trainings on a regular basis.

Chapter 4

Technical Requirements

Article 32 The fund transfer system of each Designated Settlement Bank must be in conformity with the Exchange’s technical specifications on relevant interfaces and must have successfully passed the acceptance test of the Exchange.

Article 33 The centralized nationwide bank-futures transfer system of each Designated Settlement Bank shall be able to support multipoint access from the system of a Member to satisfy the disaster recovery and the redundancy needs of such system.

Article 34 A Designated Settlement Bank shall apply to establish reliable redundant data links between the primary and backup data centers of its head office and those of the Exchange. The relevant network parameters shall be allocated by the Exchange.

Article 35 A Designated Settlement Bank shall incorporate its fund transfer system into the centralized operation and maintenance management of its technical systems, in order to perform real-time monitoring of the fund transfer systems, the data links and the hardware and software platforms.

Article 36 A Designated Settlement Bank shall give a five (5) working day notice to the Exchange if it plans to conduct any network maintenance or system upgrading that may affect the normal operation of the fund transfer system, and shall complete system testing prior to the commencement of such maintenance or upgrading.

Article 37 Designated Settlement Banks shall provide active support to and participate in emergency drills and joint testing organized by the Exchange.

Article 38 A Designated Settlement Banks shall designate a contact person responsible for responding to technical emergencies on a 24/7 basis. Any change of such emergency contact shall be promptly reported to the Exchange.

Chapter 5

Emergency Response

Article 39 A Designated Settlement Bank shall develop a sound business contingency plan for network and information safety accidents, specify the duties and functions of personnel involved therein and provide appropriate measures to be taken to ensure fast response to and timely disposition of any emergencies.

Article 40 A Designated Settlement Bank shall give an immediate notice to the Exchange and take active remedial actions with regard to any operational error or malfunction of a technical system that could disrupt the futures funds settlement business.

Article 41 A Designated Settlement Banks shall immediately notify the Exchange of any malfunction of the fund transfer system which it has detected, and provide active cooperation in examining such system in order to pinpoint the root cause, remove the malfunction, and clarify the responsibilities. If necessary, business contingency plan shall be activated immediately.

Article 42 Upon any event that the stable and safe operations of the futures margin depository business are affected, the Designated Settlement Banks shall immediately activate the business contingency plan to resume normal operation at the earliest possible time, and report details related thereto to the Exchange and the CFMMC.

Chapter 6

Supervision

Article 43 A Designated Settlement Bank shall notify the Exchange and the CFMMC in writing about any change in the futures margin depository business department, such as the position setting, the duties and functions of each position, the manager(s) and the business contacts of such department, within three (3) working days of such change.

Article 44 A Designated Settlement Bank shall notify the Exchange and the CFMMC of any major business risk or loss that impair its credit standing within three (3) working days from the day the risk or loss arises, and submit an analysis of the impact of such risk or loss on its futures margin depository business activities and a report on the solutions to address such risk or loss.

A Designated Settlement Bank shall promptly notify the Exchange of any potential or foreseeable risks of the offshore financial market and capital market, and provide assistance in risk control.

Article 45 A Designated Settlement Bank to perform system upgrading or improvement or to take any other measure that could have an impact on its futures margin depository business activities, shall give a five (5) working day notice to the Exchange, the CFMMC, related Members and Overseas Special Participants, properly conduct the information disclosure and system testing, and prepare a business contingency plan.

Article 46 A Designated Settlement Bank shall, within one (1) month after the end of each year, submit to the Exchange and the CFMMC an annual report on such matters as the operation of its futures margin depository business, services it has provided, technical support, risk management, operational errors and technical failures, and its compliance with applicable laws, administrative and ministerial regulations, and policies.

Article 47 The Exchange shall conduct annual or ad hoc inspections on Designated Settlement Banks, including the review of their qualifications, the performance of futures margin depository business and other business. Such inspections may include but not limited to on-site inspection conducted by the Exchange and self-inspection by the Designated Settlement Banks.

Designated Settlement Banks shall provide cooperation on such inspections.

Article 48 The Exchange shall conduct a comprehensive annual assessment on each Designated Settlement Bank with respect to the timeliness, accuracy, safety, and liquidity control of its futures margin depository business activities, as well as the operation and maintenance of its system, service quality, business operation, risk control, satisfaction survey and others.

Based on the results of the annual assessment, the Exchange may make overall plans and arrangements of the futures margin deposit business and related cooperative projects with Designated Depository Banks.

Chapter 7

Violations and Sanctions

Article 49 A Designated Settlement Bank shall be ordered to take rectification actions and, depending on the circumstances involved, shall be subject to warnings, circulation of criticism, suspension of its depository business with new Members or Overseas Special Participants, or otherwise, if

1. the Designated Settlement Bank fails to perform its obligations specified in these Rules and the business agreement entered into with the Exchange, or violates other rules of the Exchange;

2. the Designated Settlement Bank fails to take effective measures against an incident that affect or is likely to affect its futures margin depository business, thereby jeopardizing the sound operation of the futures market and damaging legitimate rights and interests of the Exchange, and its Members, Overseas Special Participants, Overseas Intermediaries and Clients;

3. the Designated Settlement Bank unjustifiably restricts the deposit and withdrawal of fund requested by any Member without the written consent of the Exchange;

4. the Designated Settlement Bank fails to notify the Exchange immediately or has not taken effective measures promptly in the case of any operational error or malfunction of technical systems that may affect its futures margin depository business activities;

5. the Designated Settlement Bank fails to cooperate with the Exchange on the annual or ad hoc inspections, or fails to submit the required annual report of its futures margin depository business or any other materials required by the Exchange;

6. the Designated Settlement Bank fails to comply with CFMMC’s requirements to report the futures margin depository business activities;

7. the Designated Settlement Bank fails to meet the requirements of banking regulators on such indicators as capital adequacy ratio, liquidity and asset-liability ratio;

8. the Designated Settlement Bank is being adversely affected by poor service quality or unstable bank-futures fund transfer system; or

9. other circumstances prescribed by the Exchange.

Article 50 The futures margin depository business of a Designated Settlement Bank shall be fully suspended if:

1. the fund in the dedicated settlement account of the Exchange is frozen or deducted as a result of failure to take effective actions by the Designated Settlement Bank;

2. the Designated Settlement Bank assists a Member in collateralizing margins for any other purposes;

3. the Designated Settlement Bank has incurred a loss in the recent financial year; or

4. other circumstances prescribed by the Exchange.

Article 51 The Exchange shall allow a Designated Settlement Bank, of which the futures margin depository business has been suspended, to resume its depository business if the Exchange determines that the Designated Settlement Bank has taken effective rectification actions and restored its capabilities to manage its futures margin depository business activities to the normal level.

Article 52 The Exchange may approve the Designated Settlement Bank’s application to terminate its qualification as a Designated Settlement Bank.

The qualification of a Designated Settlement Bank may be cancelled or revoked by the Exchange if:

1. the Designated Settlement Bank has provided fraudulent materials or information to the Exchange;

2. the Designated Settlement Bank has misappropriated margin funds;

3. the Designated Settlement Bank fails to pass the annual inspection of the previous year and still fails to meet the requirements after the specified period for rectification;

4. the Designated Settlement Bank has incurred consecutive losses in the recent three (3) financial years, or no longer meets the prerequisites to qualify as a Designated Settlement Bank;

5. the business license of the Designated Settlement Bank is legally revoked, or the Designated Settlement Bank is dissolved or has declared bankruptcy;

6. the Designated Settlement Bank has lost its legal person status as a result of a merger or acquisition;

7. the Exchange believes that the Designated Settlement Bank is exposed to any major latent risk; or

8. other circumstances prescribed the Exchange.

Article 53 When the Exchange approves the termination or determines to revoke the qualification of a Designated Settlement Bank, the Exchange shall give a ten (10) trading day notice to the Designated Settlement Bank, report such termination or revocation to the China Securities Regulatory Commission (the “CSRC”) in accordance with relevant provisions and announce the same at the official website of the Exchange.

The termination or revocation of the qualification of a Designated Settlement Bank does not affect any other existing legal relationship between the bank and the Exchange. The Exchange may terminate related business relationships with such Designated Settlement Bank pursuant to applicable laws and regulations.

Article 54 Any Designated Settlement Bank that is disqualified by the Exchange shall not re-apply for the qualification within three (3) years of the date of such disqualification.

Chapter 8

Miscellaneous

Article 55 The Exchange reserves the rights of the interpretation of these Rules.

Article 56 These Rules shall come into force on [ ].

About Us \ Business \ Technical Support \ Contact Us


Copyright © 2014 Shanghai CIFCO Futures Co., Ltd

The above content for translation may not accurate

please contact us to confirm what you see at this website.