OTC Derivatives Framework Released by Chinese Regulators

OTC Derivatives Framework Released by Chinese Regulators

In a message from The Securities Association of China, (SAC), Chinese regulators released the first management method for the newly launched national OTC equity transfer system for non-listed small and medium-sized enterprises.

China Daily reports that the China Securities Regulatory Commission (CSRC) creation of the Chinese OTC derivatives regulations will enable trading for securities firms, providing business – including recommending qualified enterprises, to list on the OTC market, acting trading equities for investors, and offer market-maker services under the new regulation. The creation of this framework and management system enables a new market for for these financial instruments in the Asia nation. According to China Daily, CRSC officials say, ”This will be the legal basis to transfer the previous regional off-exchange markets into a national unified system.”

Equity trading on the “third board” can use market-maker mechanisms, come to a mutual agreement, or trade through a price bidding system. According to the CRSC, the number of stockholders in one non-listed small and medium-sized enterprises in the OTC market can be more than 200.

CRSC, SAC Release New Derivatives Framework

With permission from the CRSC, the SAC released the regulatory framework, allowing this government agency to supervise the efforts of Bejing-based National Equities Exchange and Quoations Co. Ltd. in its duty, managing the new trading platform that allows market participants to trade OTC derivatives contracts.

The national OTC market launch on Jan 16 in Beijing was based on pilot programs set up in the Zhangjiang High-tech Industrial Development Zone in Shanghai, and the East Lake High-Tech Development Zone in Wuhan, and Tianjin’s Binhai High-Tech Industrial Development Area.

About The Author


Elan Mendel

Elan Mendel

Elan Mendel is an associate with Shipkevich PLLC, and has done registration, compliance, and enforcement defense work for commodities, futures and forex firms registered with the CFTC and NFA as FCMs, RFEDs, and others. Elan also specializes in domestic and cross-border insolvency issues.

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