For the first time this year, two futures companies were fined and suspended from opening new businesses, following a series of signals in the fourth quarter of last year.

Cailian Press, February 28 — (Reporter Zhou Xiaoya) Under the backdrop of increased regulatory efforts, penalties involving suspending new business openings have become more frequent in recent futures industry enforcement notices.

On February 27, the Shanghai Securities Regulatory Bureau disclosed two notices related to futures company penalties from January, involving Huawen Futures and Hengli Futures. Both firms were fined and suspended from adding new business, with penalties targeting the companies as a whole, and responsible individuals also being penalized.

Behind these stricter penalties compared to previous cases, both companies were previously penalized by regulators last year, and in some cases, penalties were not rectified in time or resulted in repeated punishments. These violations are considered typical of recent industry misconduct. As of now, the futures industry has received five penalties this year involving suspension of new business, and this is the first time this year that a penalty has suspended a futures company’s overall operations.

Industry insiders believe this type of penalty has a more substantial impact on company operations. In a context of increasingly fierce industry competition and limited growth opportunities, such measures are likely to have particularly strong deterrent effects.

Internet Marketing Violations Resurface, Indirectly Conducting Intermediary Business

Specifically, the violations by the two companies share similarities. Both were ordered to correct their practices and suspended new futures brokerage account openings for six months. The Shanghai Securities Regulatory Bureau listed eight violations by Hengli Futures. The most prominent violations involve intermediary business and third-party cooperation.

The notices mention that Hengli Futures’ Zhejiang branch engaged in covert legal person intermediary activities jointly with the headquarters, and paid third parties intermediary fees in the form of conference expenses. Similarly, Hengli Futures’ Chongqing branch paid third parties commissions tied to client trading fees under the guise of conference and advertising expenses, effectively conducting legal person intermediary activities.

During cooperation with third parties, Hengli Futures’ expenses were also irregular. Similar to intermediary violations, the company paid third-party referral fees via conference expenses. Additionally, expenses paid to third parties were linked to client trading fees, and third-party staff were employed within related companies and paid wages, reflecting internal control deficiencies.

Hengli Futures’ Sichuan branch also had issues such as inadequate due diligence, lack of compliance oversight, providing third parties access to internal settlement systems, and paying third-party fees linked to client trading fees.

Secondly, violations related to internet marketing—an area of recent regulatory focus—also appeared in Hengli Futures’ operations.

First, internet marketing management was inadequate. The Shanghai Securities Regulatory Bureau pointed out that the company had management loopholes with seals, employed non-futures practitioners to develop clients, and had unqualified staff providing trading advice, indicating internal management and control weaknesses.

Second, Hengli Futures’ Shenzhen branch linked third-party cooperation fee standards to client trading fees during internet marketing activities.

Beyond these two main areas, other violations included inadequate asset management contract management, providing false materials to regulators, and submitting inaccurate or incomplete self-inspection reports.

These violations reflect significant internal control flaws, violate ongoing operation rules, and pose serious risks to the stable operation of the futures company and the legitimate rights of traders. The Shanghai Securities Regulatory Bureau decided to order corrections and suspend new futures brokerage account openings for six months.

In addition to the company-wide penalties, Guo Guoping, Chairman and former General Manager of Hengli Futures, received a warning letter and supervisory interview. Fong He, General Manager and head of the Shenzhen and Sichuan branches, and Qi Yonggang, Deputy General Manager overseeing Zhejiang branch and Chongqing office, also received supervisory warnings.

Prior to this penalty, Hengli Futures’ Wuhu branch and Suzhou branch had also been penalized last year for violations related to internet marketing and third-party cooperation.

Multiple Violations in Asset Management Business Including Promised Returns

Huawen Futures was subject to a six-month suspension of new asset management business. The penalty notice cited violations across personnel qualifications, product sales, product management, and risk control.

On the sales side, Huawen Futures sold asset management plans through companies and personnel lacking fund sales qualifications and employees without fund practitioner licenses.

Additionally, the company’s asset management department engaged in practices such as signing agreements in others’ names to cover investor shortfalls, multiple employees making consecutive payments of margins, and department heads promising to guarantee investor returns.

In terms of product management, some asset management plans were controlled, directed, or involved decision-making by external personnel.

Risk management was inadequate. The asset management department collected fees from related parties through futures trading consulting services and participated in futures brokerage activities.

Finally, the company submitted false or incomplete self-inspection reports related to its asset management business to the Shanghai Securities Regulatory Bureau.

It’s noteworthy that this is not the first time the company’s asset management business has been penalized. The Shanghai regulator considered these violations serious, threatening the company’s stable operation and harming traders’ rights. In December 2022, the regulator issued a correction order, but issues remained unresolved.

Therefore, the Shanghai Securities Regulatory Bureau decided to suspend new asset management business for six months.

Responsible persons penalized include Deputy General Manager Zhang Xiaojun, who oversees asset management, as well as department heads Lin Yu’ang and Ding Weiwei, all of whom received warning letters.

Frequent Penalties for Suspending New Business

According to third-party platform data, including these two penalties, there have been five instances this year of suspending new business openings. In January, Pioneer Futures’ Guangzhou branch was suspended for six months; Zhonghui Futures’ Tianjin office and Hengtai Futures’ Qingdao office were suspended for three months each. This is the first time this year that a penalty has suspended a futures company’s overall operations.

Looking at the longer term, suspensions of new business have appeared sporadically in recent years but have become more frequent since the fourth quarter of last year. Data shows that last year, the futures industry issued six penalties involving suspension of new business, five of which occurred after the fourth quarter.

Regarding this trend, Yide Futures previously analyzed that regulators are increasingly using direct tools like “suspending new futures brokerage accounts,” which significantly impact an institution’s operational capacity—one of the notable changes in the regulatory enforcement system by 2025.

They believe that suspending new business is different from traditional administrative penalties. It does not primarily rely on fines for deterrence but directly restricts client onboarding, business expansion, and revenue growth, thereby affecting market competitiveness, reputation, and annual operational goals. In an environment of fierce industry competition and limited growth, such measures are particularly effective.

“Most cases involve inadequate internet marketing management, personnel management, customer service, intermediary oversight, and weak branch compliance—reflecting that some institutions fail to improve compliance and risk control alongside business expansion,” they said. They also noted that regulators tend to impose operational restrictions at year-end, sending a clear signal: if compliance issues persist and recur, they will no longer be handled merely through rectification notices but may directly threaten ongoing operations.

They recommend that futures companies recognize the real impact of operational restrictions and shift from “passive regulatory response” to “proactive risk prevention.”