On December 10th, 2013, Shanghai Futures Exchange (“SHFE”) signed the Agreement on Coordination Mechanism for Crackdown and Prevention of Futures-related Illegal and Criminal Activities (“the Mechanism”) with Economic Crimes Investigation Division of Shanghai Municipal Public Security Bureau(“SMPSB”). Liu Nengyuan, President of SHFE, Xi Zhiyong, Vice-president of SHFE, Cheng Yiping, Chief of SMPSB Economic Crimes Investigation Division, and Huang Jingmin, Commissar of SMPSB Economic Crimes Investigation Division were present at the signing ceremony.

As a matter of fact, China Securities Regulatory Commission (“CSRC”) has strengthened its supervision and control efforts against assorted illegal and criminal activities in the capital market since the beginning of this year. Xiao Gang, Chairman of CSRC, clearly pointed out that a “cross-sector” mechanism must be built up to address major regulatory issues of the capital market. Such a mechanism shall enable us to “duly spot and prevent illegal conducts and risks; file the case, make investigation, impose penalties and release the results without delay; and address potential risks effectively.” Only by earnestly maintaining an open, fair and impartial market order and protecting the legitimate interests of investors, can our capital market achieve healthy development. SMPSB Economic Crimes Investigation Division has focused on crackdown on illegal and criminal activities within the financial field on long-term basis, and accumulated a wealth of working experience to achieve desirable results. The cooperation between SMPSB Economic Crimes Investigation Division and SHFE will more effectively expand the investigation channel against financial crimes, strengthen the crackdown efforts and deter potential criminal activities. This Mechanism jointly formulated by the both parties is one of the important moves to actively implement the relevant requirements of CSRC.

So far as we know, this Mechanism will strengthen the coordination and integration of both parties in following 4 aspects: first of all, it will build up a passageway to transfer the cases from the Exchange to criminal investigation organ, thus strengthening the crackdown efforts on futures-related crimes by improving the case transfer efficiency; secondly, it will intensify the pertinence and deterrence of criminal case preliminary investigation by clarifying the institutional arrangement for the police to pre-intervene in the cases subject to the criminal prosecution standards and fixing key evidences; thirdly, it will enhance the effectiveness of case investigation by establishing a coordinated investigation mechanism during the course of the investigation and forensics and enriching the investigation approaches for both parties; finally, it will further set up a long-term mechanism for two-way communication, coordination and exchange by clarifying the integration of such day-to-day links as information sharing and exchange, opinions issuance and professional exchange.

The signing of the agreement on this Mechanism is of great significance to further strengthen the connection between futures market self-regulation and criminal justice, effectively crack down futures-related crimes, protect legitimate interests of investors and facilitate the healthy development of the futures market.