CSRC Proposes to Move Futures Market-Making and Derivatives Trading into Futures Companies with 18-Month

In April 2026, the China Securities Regulatory Commission (CSRC) issued the Futures Company Supervision and Administration Measures (Draft for Comments) and supporting implementation rules, soliciting public feedback. The measures propose to shift futures market-making and derivatives trading, currently operated by risk management subsidiaries under filing-based access and self-regulation by the Futures Industry Association, to futures companies themselves, with licensing access and administrative supervision, granting risk management subsidiaries an 18-month transition period.

The return of over-the-counter (OTC) business from risk management subsidiaries to futures companies means existing clients must be migrated to futures companies, with a change in the legal counterparty. Leading risk management subsidiaries may have thousands of OTC derivatives clients; even if new business is suspended and all efforts are focused on migrating existing clients, it would take several months. During the migration period, business growth stalls, directly impacting operating performance, and there is also a risk of team attrition. At the trading level, bilateral fees, spreads, and slippage costs are involved; if business scale is large, bilateral trading fee costs become significant.

Within risk management subsidiaries, funds for OTC business, market-making, and physical-futures business can be interchanged and adjusted, forming an efficient operating model. After derivatives business returns to futures companies, the original fund operation system will be broken. Once funds are allocated to two separate companies, capital across business segments is isolated; even within the same futures company, OTC funds and market-making funds must be used separately. Futures companies lack the flexible funding replenishment channels available to risk management subsidiaries, such as physical collateral and intra-group borrowing, and also lack bank credit and interbank lending mechanisms. When market volatility is high, market-making and OTC businesses require urgent margin top-ups, and small and medium-sized institutions may face liquidity gaps. Capital increases at futures companies require multiple steps, including shareholder resolutions, drafting new articles of association, and industrial and commercial review; for state-owned futures companies, the approval cycle is longer. After brokerage and derivatives business funds are isolated, whether the existing fund management system of futures companies can accommodate the new business model remains to be tested.

Transferring futures market-making and derivatives trading to futures companies involves integrating two distinct business cultures, assessment logics, and operational habits within the same company. Traditional brokerage business at futures companies focuses on client acquisition and fee income, with a service-fee orientation, and assessments emphasize business scale and revenue targets. Market-making and derivatives trading conducted by risk management subsidiaries rely heavily on trading capability, with performance directly tied to trading results. In terms of job grades, administrative ranks of risk management subsidiary staff are generally lower than equivalent positions at futures companies, but because compensation is directly linked to performance, many risk management subsidiary practitioners actually earn more than futures company employees at the same grade. After the risk management subsidiary team is integrated into the futures company, management rules, assessment systems, personnel grading, compensation standards, and promotion paths must be redesigned. Derivatives-related positions are scarce professional talent; trading, risk control, and investment research personnel require mature training systems and long-term practical experience.

If preliminary business process mapping is inadequate and the transition between old and new assessment mechanisms is disjointed, there is a risk of losing core professional talent.

OTC business migration requires client cooperation, and market-driven voluntary migration faces certain resistance. Some physical enterprises, especially listed companies, have concerns about signing contracts with futures companies, as the direct contracting party changes from a non-licensed industrial service risk management subsidiary to a licensed financial institution. For a long time, risk management subsidiaries have been positioned as industrial collaboration partners, and signing with them is often understood as normal industrial collaboration or hedging activity. Some futures companies lack close cooperation with physical enterprises; clients must re-sign contracts and re-open accounts, a cumbersome process that may cause client dissatisfaction and risk losing existing clients. Combined with the new derivatives trading rules expected to take effect at year-end, which will raise the entry threshold for OTC business clients, OTC business will face dual challenges of existing client attrition and reduced new business.

After derivatives business returns to futures companies, the business nature of futures companies will undergo a fundamental change, from a pure brokerage channel to an operating entity with brokerage and proprietary trading qualifications. In terms of trading code system reform, exchanges need to distinguish between agency and proprietary positions, and also separate on-exchange and OTC business identifiers, with supporting trading systems and rules updated in tandem. The transfer of existing positions from risk management subsidiaries to futures companies requires strict segregation of proprietary positions and brokerage client positions. On the hardware side, some futures companies' existing data centers and system computing power are insufficient to support large-scale market-making operations. If the risk management subsidiary's data center and trading systems follow the business back to the futures company, efficient transfer of fixed assets within a short period must be considered.

The prerequisite for restarting derivatives business at futures companies is obtaining the business license. If license acquisition is delayed, migration cannot begin, and once business is interrupted, client attrition and team disintegration will occur. The core competitiveness of commodity derivatives business lies in pricing capability, which is rooted in a deep industrial foundation. If the risk control team at futures companies fails to simultaneously build spot market analysis capability, it will also constrain project evaluation and business decision efficiency. Currently, OTC derivatives and physical-futures business are deeply integrated, and comprehensive risk management models such as options-embedded trade are developing rapidly; such business can be executed one-stop at risk management subsidiaries. After derivatives business returns to futures companies, coordination between futures companies and risk management subsidiaries will be required, and new challenges will arise in compliance review, cross-institution communication, and operating costs.