Measures to protect traders in the futures market - first phase implementation projects and dates

Protective Measures for Traders in the Futures Market - Implementation Items and Dates of the First Phase
According to the letter No. 1070001593 issued by the Futures Industry Association of the Republic of China, the implementation items and dates for the first phase of protective measures for traders are as follows:
1. Implementation on May 2, 2018:
(1)Additional Margin of 20% for Individuals and General Corporations:
(i) Except for professional investment institutions as defined in Article 4, Paragraph 2 of the Financial Consumer Protection Act (such as domestic and foreign banks, securities firms, futures firms, insurance companies, and fund management companies), but excluding domestic government funds, all individuals and general corporations engaged in selling options will adopt temporary measures, imposing an additional margin of 20% on options A and B values (the margin increase applies to both single and multi-position transactions, as well as SPAN margin calculations).
(ii) The formula for the temporary margin increase is: Option premium market value + Max(A1.2 - Out-of-the-money value, B1.2).
(iii) Please note! The exchange and the association will draft and announce a new margin increase system, at which point the temporary measures will be canceled and replaced with the new system for margin increases.
(2) Suspension of SPAN Applications:
Only professional investment institutions will be allowed to apply for SPAN using the current application method. Applications from other individuals and general corporations will be suspended. Traders should place orders according to their strategies using single or multi-position orders. Traders can also apply for position combinations or decompositions on the trading platform.
(3) Daily Stress Testing:
Futures firms must conduct daily stress tests and notify traders whose futures trading meets the warning criteria. Traders should prepare relevant response measures as soon as they receive notification.

2. Implementation on June 20, 2018:
(1) Complete Suspension of SPAN:
Except for the aforementioned professional investment institutions, all individuals and general corporations will fully cancel SPAN margin calculations after the close of trading on June 20, 2018. Traders will switch to strategic margin calculations for margin on positions before the settlement of the day. If margin is insufficient, traders must supplement the margin by noon on the next business day. If they do not do so, their equity will be offset to return to the original margin level. Traders are reminded to promptly increase their futures account margin to avoid affecting their rights and interests.
(2) Complete Suspension of Margin Optimization:
According to regulations, the margin optimization program will be canceled after the settlement on June 19, 2018. Before the settlement of that day, the program will transmit optimized combination orders to the exchange based on the program combination. However, from the next business day onwards, the program will no longer activate, and traders should pay attention to their account positions and execute single or multi-position orders accordingly.