“The Forum for Chief Risk Officers of Futures Companies”, held recently in Beijing by the Futures Department of the China Securities Regulatory Commission (CSRC) and the China Futures Association (CFA), drew Chief Risk Officers (CRO) from over 90 futures companies around the country. Jiang Yang, Assistant to Chairman of the CSRC, spoke at the forum that the implementation of the CRO System in line with the rapidly changing futures market and the ever-changing situation of regulation is essential to the rule-based regulation of futures companies. All CROs shall recognize, do and perform their responsibilities well, and play a positive role in the compliance construction of futures companies. The regulatory authorities will research and formulate relevant regulatory guidelines to support the CROs’ responsibilities fulfillment according to law, further improve futures companies’ internal governance mechanism, continuously upgrade their compliance operation, promote the industry creditability culture and protect investors’ legal rights and interests.

Jiang Yang said that under the state strategic guidance of “steady development of the futures market”, the futures market had showed a good momentum of steady and sound development in recent years. With a steady expansion of market size, orderly promotion of product innovation and gradual exertion of economic function, the rapid development of futures market claims for better compliance operation of futures companies. The implementation of the CRO System, an important step in enforcing the “Regulation on Administration of Futures Trading”, will further promote the compliance construction of futures companies on the basis of establishing and improving such fundamental systems as the net capital-oriented risk early-warning regulation system, the supervision system of margin security depository and the real-name system of opening accounts by futures companies. The establishment of the CRO System will help improve the corporate governance structure, strengthen the internal control and risk management, promote the sound corporate operation, protect the investors’ legal rights and interests and create creditability culture.

Jiang Yang pointed out that since the implementation of the “Provisions for the Administration of Chief Risk Officers of Futures Companies (Trial)” (hereafter referred to as the “Trial Provisions”) on May 1, 2008, the CRO System has played an important role in the compliance operation and risk management of futures companies, which have, in turn, made helpful research and practice in CROs’ function exertion. Like any other new systems, the CRO System, expected to go through a long and complex process from its implementation to perfection, will definitely encounter all kinds of difficulties at the initial stage. Jiang stressed that all CROs should gain their companies’ understanding and support with a high sense of responsibility and concrete action by enhancing awareness and confidence in adhering to the “responsibilities awareness-based, fulfillment-focused and discharge-aimed” principle. In the words of Jiang, “responsibilities awareness” refers to consciousness, namely, the CROs shall know such issues as special requirements in aspects of market entry, regulation and risk disposal by the futures companies as chartered financial institutions, well orient the futures companies’ functions, promote the companies’ development by focusing on the major business, and perfectly monitor various operational risks; “responsibilities fulfillment” refers to performance, namely, the CROs shall strictly ensure the practical implementation of all compliance systems according to the “Trial Provisions”; “responsibilities discharge” refers to attitude, namely, the CROs shall do their best in compliance management, thereby strengthening compliance awareness and enhancing vocational quality.

Jiang Yang was quoted as saying that the regulatory authorities would back CROs’ responsibilities fulfillment by means of systems and supporting policies, etc. The regulatory authorities will not only provide regulatory support to facilitate the CROs’ work but also work out relevant regulatory guidelines for the detailed implementation of the “Trial Provisions”. Meanwhile, the communication between regulatory authorities, self-discipline organizations and CROs will be highlighted to expand effective channels for CROs’ function exertion. The CFA will also see to the CROs’ follow-up education and training, thereby enhancing their comprehensive quality.