Trading settlement members can only handle settlement and delivery business for their own customers.
A general settlement member can handle the settlement and delivery business for its own customers, and can also handle the settlement and delivery business for trading members who have signed settlement agreements with it. Obviously, its business scope is wider and its strength is stronger.
A futures company may decide whether to apply for a trading settlement member or a comprehensive settlement member according to its own strength and business scope. The registered capital of the company applying for trading settlement membership must be above 50 million yuan; The registered capital of a company applying for full settlement membership must be above RMB 6,543.8 billion.
Special settlement members can only handle settlement and delivery business for trading members who have signed settlement agreements with them, which are usually handled by domestic Chinese-funded state-owned commercial banks.
The last trading member, such as some large institutional investors such as fund companies, can only engage in brokerage or proprietary business, and is not qualified to settle accounts with the exchange, so they can only find general settlement members or special settlement members to settle accounts (see the figure below).
Membership structure of China Financial Futures Exchange
CICC implements a hierarchical settlement model. That is, after the end of the day's transaction, CICC will settle the profit and loss, transaction margin, handling fees, taxes and other expenses of all contracts for the settlement members according to the settlement price of the day, transfer the net accounts receivable and payable at one time, and increase or decrease the settlement reserve accordingly. After the settlement is completed by CICC, the settlement members shall settle the investors and non-settlement members (trading members) on the same day according to the principle of debt-free settlement; Non-settlement members settle investors according to the same principle. It can be seen that CICC disperses and dissolves risks through the hierarchical structure of "investor-trading member-settlement member-exchange", which strengthens the overall anti-risk ability of the financial futures market.
The introduction of hierarchical settlement system is to enhance the overall anti-risk ability of CICC. Under the hierarchical settlement system, institutions with strong financial strength and rich management experience can become settlement members, and other non-settlement members who do not have settlement membership must settle through settlement members, thus forming a multi-level risk management system. Graded settlement helps the market to control and absorb risks step by step, and is conducive to the formation of a diversified and multi-level pyramid risk control system, so that many local risks can be resolved at the level of settlement members, ensuring the smooth operation of the financial futures market.