After three readings, the Standing Committee of the National People’s Congress voted on 20 April 2022 to adopt the PRC Futures and Derivatives Law (the “FDL”), marking a significant legal milestone for the futures and over-the-counter (OTC) derivatives markets in Mainland China.
The FDL will provide for the very first time a comprehensive legal and regulatory framework for the exchanged-traded futures market and the OTC derivatives market in Mainland China. The FDL regulates the trading, clearing and settlement of futures and derivatives and provides a framework for the supervision of institutions and participants in the futures and OTC derivatives markets. Provisions governing cross-border trading and supervision also provide a legal foundation for international participants to enter the futures markets in Mainland China. The FDL also regulates market misconduct offences in the futures and OTC derivatives markets such as market manipulation, insider dealing and market misinformation.
We set out in this Bulletin a comprehensive summary of the FDL and our observations and commentary on key provisions.