Regulations Governing Managed Futures Enterprises Article 27

In accepting a mandate from a principal for discretionary futures trading, the managed futures enterprise may not in any way or for any reason take custody of any of the discretionary assets provided by the principal or of any subject matter obtained in trading or investment of those assets.Where a managed futures enterprise accepts a mandate for discretionary futures trading, the principal shall designate a custodian institution and enter into a separate mandate contract with the custodian institution, appointing the custodian institution to undertake the opening of accounts, deposits of margins and premiums, custody of funds and securities, clearing and settlement, account servicing and other related matters for futures trading and investment in futures-related spot commodities.In carrying out the operations referred to in the preceding paragraph, the custodian institution shall first review the scope and limitations of the mandate contract for discretionary futures trading.The content and contract template for the mandate contract referred to in paragraph 2, and any amendments thereto, shall be drafted by the CNFA and submitted to the Competent Authority for recordation.If the principal of discretionary futures trading business is a trust enterprise or other business approved by the Competent Authority, the principal may itself keep custody of the discretionary assets, exempt from the provisions of paragraph 2.