Gold Yuan Futures' Woes: Slack Controls, Sliding Performance

Under the strong regulatory stance, another futures company has been fined.

Recently, the Hainan Securities Regulatory Bureau issued an announcement stating that it has taken regulatory measures to issue a warning letter to Jin Yuan Futures Co., Ltd. (hereinafter referred to as "Jin Yuan Futures").

The main reason for the penalty is the company's inadequate identification and disclosure of related parties, and the lack of a sound and effective system and process for its own funds' external investment business.

At the same time, the significant decline in Jin Yuan Futures' performance in the first half of the year has also attracted market attention.

The company's operating income in the first half of the year declined by 8.67% year-on-year, and the net profit attributable to shareholders of the listed company declined by 71.15% year-on-year.

According to the warning letter, upon investigation, Jin Yuan Futures has been found to have inadequate identification and disclosure of related parties, and has not established and effectively implemented a system and process for its own funds' external investment business, violating the provisions of Article 42, Paragraph 1 and Article 56 of the "Administrative Measures for Futures Companies" (CSRC Order No.

155, hereinafter referred to as the "Regulations").

In accordance with the provisions of Article 109 of the "Regulations", the Hainan Securities Regulatory Bureau has decided to take administrative regulatory measures to issue a warning letter to Jin Yuan Futures and record it in the capital market integrity file database.

The Hainan Securities Regulatory Bureau stated that Jin Yuan Futures should attach great importance to this, take effective measures to strengthen business management, improve compliance levels, and submit a written rectification report to the Hainan Securities Regulatory Bureau within 30 days from the date of receipt of this decision.

Will this incident have an impact on the company?

Jin Yuan Futures responded that the penalty will not have a significant impact on the company's operations and finances, and there is no risk of being delisted due to this penalty.

Regarding subsequent rectification measures, Jin Yuan Futures stated that the company attaches great importance to the administrative regulatory measures decided by the Hainan Securities Regulatory Bureau, fully recognizes the importance of improving the company's information disclosure and internal control system implementation, and will further strengthen the study of relevant laws and regulations, and revise the content of the company's relevant systems.

Jin Yuan Futures also emphasized that the next step for the company will be to accurately identify related parties, strictly implement the approval and disclosure systems for related party transactions, and establish and implement systems and processes for its own funds' external investment business.

The company's 2023 annual report has disclosed other companies controlled by the same parent company and companies controlled by the same ultimate controlling party as related parties.

"In recent years, the regulatory authorities have significantly increased their regulatory efforts in the futures industry, indicating a focus on industry standardization and risk control," financial commentator Zhang Xuefeng told the International Finance News reporter.

Futures companies still need to continue to establish and improve internal control systems, optimize internal management processes, strengthen compliance training for employees, enhance overall compliance awareness and risk management capabilities.

At the same time, futures companies also need to increase investment in information technology to improve system security and stability, and ensure the standardization of technical management.

Regarding performance, Jin Yuan Futures was established in 1991, jointly funded by Jin Yuan Securities Co., Ltd. and China Aviation Xin Gang Guarantee Co., Ltd., with the actual controlling shareholder being the Capital Airport Group Co., Ltd.

In 2017, Jin Yuan Futures was listed on the National Equities Exchange and Quotations (NEEQ).

In terms of performance, Jin Yuan Futures experienced a decline in both revenue and net profit in the first half of 2024.

Data shows that from January to June 2024, the company achieved a revenue of 40.065.3 million yuan, a year-on-year decline of 8.67%; the net profit attributable to shareholders of the listed company was 3.0084 million yuan, a year-on-year decline of 71.15%.

The company's revenue mainly depends on brokerage business and interest income, but the brokerage business income has declined.

Specifically, the company's futures brokerage business income in the first half of the year was 14.7532 million yuan, accounting for 36.82% of the revenue, and the brokerage business income decreased by 28.78% year-on-year.

The net interest income was 19.2621 million yuan, accounting for 48.08% of the revenue, an increase of 35.72% year-on-year, mainly due to the increase in the scale of brokerage business customers bringing an increase in interest income from available funds.

In fact, in 2022 and 2023, the net profit attributable to shareholders of Jin Yuan Futures showed a year-on-year decline.

In 2022, the net profit attributable to shareholders of the listed company was 16.2386 million yuan, a year-on-year decline of 17.9%; in 2023, the net profit attributable to shareholders of the listed company was 14.5911 million yuan, a year-on-year decline of more than 10%.

In July of this year, Jin Yuan Futures disclosed a change in senior management, involving the position of the company's brokerage business line leader.

According to the announcement, due to the company's strategic and business development needs, after research, Nie Yifeng was appointed as the deputy general manager of the company, in charge of the brokerage business line.

Nie Yifeng had worked at Ping An Futures for 12 years, successively holding positions such as the head of the financial derivatives department of Ping An Futures, the head of the comprehensive development of the institutional sales department, the head of the investment consulting department, the head of the asset management department and investment manager, and the executive deputy general manager of the brokerage business department.

The future development of Jin Yuan Futures will continue to be closely monitored.