Recently, the China Future Association ("CFA") has issued the Guidelines for Stress Tests for Futures Companies (for Trial Implementation) (the "Guidelines"), effective from the issue date.
The Guidelines mainly lay down requirements on establishing the mechanism of stress tests for futures companies and the relevant systems in this regard, and make clear the content, procedures and methods of stress tests. Further, the Guidelines provide that in case of any of five circumstances, such as "carrying out major innovative business, determining limits on the size of investment made with self-owned funds, and determining business plans and business scale", futures companies shall perform special or comprehensive stress tests based on their own situations. In addition, the Guidelines clearly specify that a futures company shall carry out comprehensive stress tests at least once every year. where the test results reveal that there are likely major risks that result in the failure to let risk regulatory indicators, such as the net capital and liquidity, meet regulatory standards, the futures company concerned shall promptly report the same to the securities regulatory bureau at its locality and the CFA; where the test results demonstrate that potential risks are beyond the tolerance of the futures company, it shall take the relevant measures, such as adjusting its business or supplementing capital, to effectively control such risks under its risk tolerance.