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CSRC Formally Approved Five Chinese Futures Exchanges as the Qualifying CCP

2019-03-18 18:50:29

CSRC has Formally Approved Five Chinese Futures Exchanges as the QCCP


CSRC has formally approved Shanghai International Energy Exchange (INE), Shanghai Futures Exchange (SHFE), Dalian Commodity Exchange (DCE), Zhengzhou Commodity Exchange (CZCE) and China Financial Futures Exchange (CFFEX), as the QCCP. This shows that Chinese futures market has further improved internationalization by adopting international standards to strengthen its market attraction and competition since the internationalization of Crude Oil, Iron Ore and PTA futures. And symbolizes that by means of benchmarking international standards, Chinese futures market further enhances its governanceimprove the management level, strengthen the ability of risk prevention and mitigation, and so as to lay the solid foundation for its future development.


A Qualifying Central Counterparty (QCCP) refers to a central counterparty that has established the regulated and complete central counterparty clearing mechanism according to Financial Market Infrastructure Principles (PFMI) and has passed the approval from appropriate regulatory authorities. In recent years, Chinese futures exchanges has made great efforts to promote its construction towards becoming a QCCP by building a sound governance structure, implementing total risk management, optimizing clearing membership services, and establishing the risk reserves mechanism. And now all the Chinese futures exchanges have built a standardized and complete CCP clearing system and met the principles for QCCP.


Compared with common CCP, QCCP is more preferential in international regulatory requirements such as counterparty trading risk exposure weight, which can significantly reduce the transaction costs of some financial entities (mostly banks). The recognition of QCCP has positive influence not only on the exchange itself, but also on the market participants and the futures market as a whole. Being a QCCP will enhance the international influence of the exchange and attract more foreign investors to participate in the Chinese futures market. Next, the futures exchanges will adhere to the ‘market-oriented, rules by law, internationalized and professionalized’ development path, align with national strategies, accelerate the internationalization of futures market and work on information disclosure as per PFMI standards and continue fulfilling their duties as QCCP, thus contributing to the further opening-up of China’s financial market.


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