Securities Regulator Urges Local Gov'ts to Deal with Illegal Exchanges

(Beijing) – China's top securities regulator called upon local governments in its nationwide campaign against illegal futures exchanges which have popped up in China in recent years during a recent government conference.

The meeting attended by various government departments, was led by the Chairman of the China Securities Regulatory Commission, Guo Shuqing. He also made clear that local governments will be asked to play a larger role in the inspection and enforcement of regulations.

Guo also clarified during the meeting that futures exchanges are prohibited from derivatives trading and unreported trading of stocks.

Official statistics show that there are more than 300 exchanges operating around the country. Some have the approval of local governments, but others have sprung up illegally.

Encouraged by vague regulations on futures trading, new financial products were created that stand outside of the grasp of financial regulators.

Since November, the central government released notices to launch a nationwide inspection system on futures exchanges while tightening up regulations on futures trading.

In late November, a source close to the CSRC said it and local governments had conducted surveys on various types of exchanges. Local governments were told to complete and submit the survey by the end of December.

However, ministries and local government officials disagreed over how to deal with illegal futures trading as some local officials argued in maintaining the exchanges as economic growth drivers. Meanwhile, measures on how to handle investors after the crackdown of illegal exchanges remain unsettled.