The China Futures Association (hereinafter referred to as the “Mid-term Association”) publicly solicits opinions on the “Guidelines for the Internal Control of Futures Risk Management Companies”.
On the evening of October 21, the Interim Association issued an announcement stating that it has studied and formulated the “Guidelines for the Internal Control of Futures Risk Management Companies (Draft for Comment)” (hereinafter referred to as the “Guidelines” ), and recently solicited opinions from the industry.
Since the beginning of this year, domestic commodity prices have continued to rise, affecting economic operation and enterprise production and operation. Risk management companies are also facing certain market risks in their daily operations. Internal management puts forward higher requirements. At present, the construction of internal control of futures risk management companies is mainly based on the requirements of relevant chapters and a series of self-discipline notices of the “Guidelines for the Pilot Business of Futures Company Risk Management Companies”. The above rules have played a positive role in promoting the internal management of futures risk management companies and establishing a self-discipline mechanism. However, due to the relative principle of content and the scattered requirements for internal control of various businesses, its pertinence and guidance need to be further improved.
According to the introduction of the mid-term agreement, the “Guidelines” highlight the company’s risk management services’ Risk prevention capabilities are the principle. On the basis of summarizing the internal control related rules and notification requirements issued in the previous period, build a complete internal control framework system, establish control activities and measures covering various businesses and various links, and guide the risk management company to establish a scientific and effective Internal control system, and strengthen the supervision of the implementation of its internal control.
The Guidelines have five chapters and 61 articles. The first chapter mainly includes the definition, elements, objectives and principles of internal control.
The second chapter is the basic requirements, and the content mainly includes three parts: the first is the requirements for the construction of internal control environment such as philosophy and culture, honest practice, governance structure, and internal control structure; the second is Requirements for control activities such as authorization management, business evaluation, risk management, financial management, and capital management; third, requirements for information management such as system construction, information submission, and archives.
Chapter 3 is the main control content, which is divided into four parts according to business types: The first is the control measures for futures and current business, which mainly involve hedging plan design, target strategy, Hedging management, inventory management, warehousing management, customer management and risk monitoring; the second is OTC derivatives business control measures, mainly involving product design, pricing models, inquiry and quotation, transaction management, hedging management, settlement management, risk management, customers Management, credit management and system construction; the third is market-making business control measures, mainly involving account independence, strategy testing,System configuration, risk management, and emergency response plans; the fourth is warehousing and logistics business control measures, which mainly involve warehousing service agreement specifications, warehouse management, safety management and risk management.
Chapter 4 is about supervision and evaluation. The content mainly includes the inspection mechanism, evaluation mechanism, correction mechanism, accountability mechanism and external supervision of internal control.
Chapter 5 is the supplementary provisions, the content of which is the main body and implementation time of the guidelines.
The Interim Association stated that futures risk management companies are typical traders who use the on- and off-exchange markets to transfer corporate risks to the market through professional analysis and pricing capabilities. Other participants. To give full play to the risk management function of the futures market, it is necessary to vigorously develop a group of traders.
In the next step, for the group of traders, the Mid-term Association will explore the establishment of a “good people raise their hands” system, that is, a path to nurturing traders based on credit management. When the proprietor has a mature trading strategy, a good credit record, and is supported by corresponding transaction data, he can actively apply to the Interim Association to become an ordinary member to provide others with small-amount risk management services. According to the principle of materiality and externality, when the business volume of ordinary members exceeds a certain scale, or the business influence reaches a certain level, they can apply for administrative permission from the supervisory authority to become a dealer and provide risk management for more market entities Services, while also fulfilling more stringent requirements for net capital, risk exposure management, industry standards, and information submission.