In order to strengthen the risk control of the futures market, implement the real-name system of opening accounts, increase the efficiency of opening accounts in the futures market and further lay a solid foundation for the standardized development of the futures market, the China Securities Regulatory Commission (CSRC) designed the unified scheme of opening accounts in the futures market and drafted the “Administrative Rules for Opening Accounts of Clients in Futures Market” (the “Rules”).

I. Proposition of Unified Scheme of Opening Accounts in the Futures Market

The current system of clients opening accounts in the futures market is as follows: the clients sign the “Agreement on Futures Brokerage” with the futures companies and receive the examination and verification of the real-name system, with the image materials kept as record. Afterwards, the futures companies log into the member services systems of various futures exchanges to fill in their clients’ information and apply for the trading codes. After the futures exchanges receive the applications, they verify the clients’ information and distribute the trading codes according to the business rules, and then send the codes back to the futures companies through the member services system. For the absence of the procedures for rechecking by an independent third-party, this current system of clients opening accounts and trading code application in the futures market is not favorable to improve the ability of risk prevention of the market or to guarantee the authenticity, accuracy and completeness of the clients’ information. Besides, since the clients and the futures companies shall log into three futures exchanges’ systems at the same time to apply for the trading codes, the efficiency is rather low.

Since 2008, the CSRC has organized China Futures Margin Monitoring Center Co., Ltd (the Monitoring Center), all futures exchanges, some futures companies, Shanghai Futures Information Technology Co., Ltd and software developers of settlement of futures trading, etc. to conduct the research and demonstration concerning the problem of clients opening accounts in futures market. On the basis of broad opinions and intensive study, a unified system of opening accounts in futures market is framed. Its main content is that when the futures companies open accounts for their clients, they shall apply to the futures exchanges for trading codes through the Monitoring Center, which will recheck the clients’ information through the network system of inquiry and service of identity cards of the Ministry of Public Security and the inquiry and service system of national center of code allocation to organizations and then forward clients’ rechecked information to each futures exchange. Each futures exchange shall distribute the trading codes to clients according to their business rules and send the codes back to the futures companies through the Monitoring Center. Thus the procedures for account opening are completed. In the course of it, the Monitoring Center shall manage and protect the information of the clients in the futures market, set up a unified code of account opening for each client, and establish and maintain a complete database of the clients in the futures market.

Thus, through the stage that the futures companies apply for the trading codes to the futures exchanges on behalf of their clients and the added procedures for rechecking, forwarding, collecting and analyzing the client’s information by the Monitoring Center, it can effectively solve the problems existing in the account opening of clients in the current futures market. Meanwhile, as the scheme of unified account opening doesn’t change the current practice at the stage of opening accounts and applying trading codes by the clients and the stage of forming trading codes by the futures exchanges, there will be no influence on the market on the whole.

II. Main Contents of the “Rules”

There are seven chapters, totaling 43 articles, in the “Rules” and the “Requirements of Formats of Clients’ Image Materials” is its attachment. Chapter I “General Provisions” consists of 7 articles, which specify the intention and legal basis of implementing the unified system of account opening, stipulate the rights, obligations and duties of the regulatory institutions and relevant parties of the market including the futures companies, the Monitoring Center and the futures exchanges and draw the basic outline of the unified scheme of account opening.

Chapter II “Account Opening of Clients and Application for Trading Codes” consists of 15 articles, which stipulate the requirements of real-name system of account opening of clients, the futures companies’ obligations of examination and verification of the real-name system towards clients, the procedures for applying for the trading codes by the futures companies for the clients, the Monitoring Center’s duty of rechecking the applications submitted by the futures companies and other contents.

Chapter III “Amendment to Clients’ information” consists of 4 articles, which stipulate the working procedures and requirements of amending the clients’ information by the futures companies. If the client’s information needed to be amended is related to the application for the trading code, the futures company shall submit the amendment application to the Monitoring Center and forward the amended information to relevant futures exchanges and futures companies after the Monitoring Center rechecks it. The amended information will be handled by the aforesaid futures exchanges and futures companies.

Chapter IV “Cancellation of Clients’ Trading Codes” consists of 4 articles, which stipulate the procedures and requirements of handling the cancellation of clients’ trading codes by the futures companies.

Chapter V “Management of Clients’ Information” consists of 3 articles, which make specific requirements of the management and maintenance of clients’ information by the futures companies and the Monitoring Center. In this chapter, it is specified that the Monitoring Center shall, relying on the unified system of account opening, establish the client information database of the futures market. Thus, together with Article 6 “The Monitoring Center shall set up the unified code of account opening for every client and establish the corresponding relation between the untied code of account opening and the client’s trading code at futures exchanges” of the “General Provisions”, the clear legal basis is provided for setting up and managing the complete client database of the futures market.

Chapter VI “Supervision and Management” consists of 7 articles, which stipulate the specific contents of supervision and management on the unified account opening and specify that the Monitoring Center shall formulate operation guidance for opening account by the client in the futures market according to the Rules. The chapter also specifies the legal responsibilities of the futures companies, securities companies, the Monitoring Center, futures exchanges and the staff after they break the Rules.

Chapter VII “Supplementary Provisions” consists of 4 articles, which mainly make stipulations of the implementation procedures for the unified account opening in addition to the stipulations for the special conditions under the member classification clearing system. The futures companies are required to finish the work of switching the system of account opening in phases according to the unified deployment of the CSRC.

In order to ensure the unity of the format of clients’ image materials and make it convenient to make archives for a long time and check afterwards, the attachment “Requirements of Formats of Clients’ Image Materials” makes specific stipulations of the clients’ image materials and the format needed to be collected by the futures companies.

III. Positive Effects of Untied Account Opening

1. it is favorable to improve the ability of preventing the risks of the futures market. After the implementation of the unified account opening, the Monitoring Center will establish the client information database of the whole futures market according to the data provided by the unified system of account opening, set up a unified code of account opening for the client and establish the corresponding relationship with the client information including name of the client, internal capital account, futures clearing account and trading code in the unified system of account opening so as to realize the centralized and untied management on the clients’ information of the futures market and increase the level of regulation and risk prevention of the futures market. In addition, the establishment of the unified system of account opening lays a solid foundation for the monitor and control of the futures market and creates the conditions of enhancing the analysis, research, monitor and control of the market.

2. it is favorable to strengthen the real-name system of opening accounts in the futures market. At present, the real-name system of account opening in the futures market is implemented according to the stipulations in the “Notice of Further Strengthen the Real-name System in Stage of Opening Accounts by Futures Companies” (Zheng Jian Qi Huo Zi [2007] No. 257) and the regulatory departments inspect the futures companies’ implementation of the real-name system of account opening afterwards. After implementation of the unified account opening, in addition to examination and verification of real-name system conducted by futures companies, the Monitoring Center will check the clients’ information of account opening submitted by the futures companies through connecting the unified system of account opening with the inquiry and service system of the identity card of the Ministry of Public Security and the system of national center of code allocation to organizations. If the information fails to be approved upon check, the client will be unable to apply for the trading code, which means that he/she cannot conduct transactions. Therefore, after implementation of the unified system of account opening, the real-name system of opening account in the futures market will be changed from post-check to pre-control, which can greatly improve the authenticity and efficiency of the real-name system.

3. it is favorable to raise the operation efficiency of the futures market. At present, a futures company applying for the trading code for the client needs to log into different member service systems of three futures exchanges to fill in the client’s information. After implementation of the unified account opening, the futures company only needs to log into the unified system of account opening of the Monitoring Center to fill in the untied “Application Form for Client’s Trading Code” to apply for the trading code of the client. Thus, the market efficiency can be greatly enhanced and the social cost can be saved. In addition, though the check procedures for the real-name system towards the clients by the Monitoring Center are added into the work of account opening, the electronic transmission and the automatic check of the system will not have influence on the convenience of the futures companies and clients.

IV. Relevant Technical Preparations and Next Arrangements

At present, the system construction and system upgrading of futures exchanges, the Monitoring Center and 8 trial futures companies have been basically completed and fully tested under the real production environment, with a good test result and normal operation of all systems. The technical preparations for the unified account opening have been finished. Next, the CSRC will promulgate the “Rules” on the basis of fully soliciting opinions. As the upgrading of systems in the futures companies needs to be conducted by the futures software developers on the spots of the companies, the futures companies cannot implement the “Rules” simultaneously under the current conditions. Therefore, the CSRC plans to, according to the principle of “upgrading and implementation in phases”, guide and urge the futures companies to use the unified system of account opening in phases. When receiving the new clients, the futures companies having used the system shall open the accounts for the clients and apply for the trading codes according to the Rules. The futures companies not having used the system still apply the trading codes for the clients according to the original procedures. In addition, in order to ensure a smooth and successful implementation of the work of unified account opening, the CSRC drafted the “Notice of Implementation of ‘Administrative Rules for Opening Accounts of Clients in Futures Market’” and plans to issue it to relevant units of the system.