Measures Against Abnormal Trading on Dalian Commodity Exchange(for Public Consultation Only)
Article 1 These measures are formulated in accordance with such laws as the Trading Rulesof Dalian Commodity Exchange,Measures for Membership Management of Dalian Commodity Exchange, Measures for Risk Management of Dalian Commodity Exchange, and Measures for Handling of Violations of Dalian Commodity Exchange,for the purpose of regulating futures trading practices, protecting the legitimate rights and interests of futures trading participantsand maintaining an orderly futures market.
Article 2 The Exchange will monitor the futures trading, and upon discovery of any abnormal circumstance, may take the appropriate regulatory measures or disciplinary punishment measures against the relevant futures company Members, overseas brokers, non-futures company Members and clients.
Article 3 The futures company Members and overseas brokers shall practically perform the duties of managing the client trading acts, timely discover, report and prevent any client’s abnormal trading acts and not indulge, induce, instigate or support any client to carry out any abnormal trading.
Article 4 Any non-futures company Member or client which participates in futures trading shall comply with laws, regulations and the Exchange’s business rules, accept regulation by the Exchange and consciously normalize its trading acts. In addition, the client shall accept the futures company Member’s and the overseas broker’s management in legality and regularity concerning its trading acts.
Article 5 Any use of the programmed trading shall be filed at the Exchange in advance. In case the non-futures company Member or client use the programmed trading to give a trading instruction, which may affect the Exchange's system safety or normal trading order, the Exchange may take the applicable restrictive measures.
The programmed trading shall refer to the trading method by which the computer automatically gives the trading signal or order-declaration instruction as per the pre-set trading models of quotations analysis, risk management and other functions.
Article 6 Any of the following activities shall be considered as abnormal trading practice:
(1) Acting as one’s own counterparty, buying and selling contracts between one’s own accounts;
(2) Buying and selling orders between related accounts with common beneficial ownership as identified by the exchange;
(3) Frequent submission and cancellation of orders;
(4) Cancellation of large orders;
(5) Exceeding position limits within related accounts of common beneficial ownership as identified by the exchange;
(6) Undermining the safe and orderly operation of the exchange trading system through the use of algorithms that submit large or rapid orders;
(7)Other circumstances prescribed by the exchange.
Article 7 Any futures company Member and overseas broker shall closely monitor the clients’ trading, proactively prevent any abnormal trading that may occur during their trading and guide the clients to rationally and lawfully participate in the futures trading.
If a futures company Member or an overseas broker discovers that any of the abnormal trading listed in Article 6 of these Measures occurs to any of its clients during the futures trading, it shall remind it, and dissuade and prevent it from carrying out such abnormal trading, and timely report to the Exchange.
Article 8 Should a clienthas one of the abnormal trading activities prescribed in Article 6 and could not be stopped after dissuasion and prevention,the futures company member can adopt measures including increasing trading margin, suspending opening new positions, forced liquidation and other regulatory measures available to the exchange.
Article 9 Should a non-brokerage member or clienthave one of the abnormal trading activities prescribed in Article 6, the Exchange can adopt regulatory measures including telephone notification , requesting an explanatory report, requesting a written letter of commitment, enrolling into main regulatory list. In serious cases, according to the Measures for handling of Violations of Dalian Commodity Exchangeand other relevant rules and regulations, the exchange can force a liquidation of positions, limit opening of new positions and adopt other regulatory measures available to the exchange. If the behavior is alleged to have violated laws than the exchange can involve the China Securities Regulatory Commission (CSRC) to investigate.
Article 10 An applicable regulatory measure or written decision, if any, taken by the Exchange against a client who has the abnormal trading will be issued to the client through the futures company Member the client is affiliated with. The futures company Member shall timely contact the client and inform the Exchange’s applicable regulatory information and written decision, and shall properly keep the evidences and take effective measures to normalize the client’s trading.In case an overseas broker is involved, the overseas broker shall assist the futures company Member to contact the relevant clients in a timely manner to inform them of the Exchange's relevant regulatory information and written decisions.
Article 11Should a futures company member have any one of the following activities, the Exchange can demand rectification and take corresponding regulatory measures according to the Measures for Handling of Violations of Dalian Commodity Exchangeand other relevant rules and regulations. The Exchange can also motion the CSRC to deduct the offending member’s regulatory points. The futures company member:
(1) Failed to pass on the Exchange’s regulatory information or written decision to the customer in a timely manner;
(2) Failed to take effective measures to stop its customer’s abnormal trading practice;
(3) Failed to assist in investigation of the alleged illegal activities or intentionally delayed, concealed or omitted key facts during an investigation;
(4) Connived, induced, encouraged or supported the customer’s abnormal trading practices;
(5) Other circumstances prescribed by the Exchange.
Article 12 The identification standards and handling processes ofabnormal trading practices is decided by the Exchange.
Article 13 The right to interpretation of these measures lies solely with the Exchange.
Article 14These Measures shall enter into force as ofthe date of promulgation.