China's first futures law, a draft of which was submitted to the country's top legislator on Monday for initial revision, is expected to regulate and further promote the development of the futures market in the country, experts said.

The Standing Committee of the 13th National People's Congress, China's top legislature, began its 28th session on Monday. During the four-day session, the purposes, principles and supervision mechanism of the futures law will be reviewed. The legislature will also review stipulations for trading, settlements and transactions, basic mechanism for other derivatives trading, protection for futures investors, futures management institutions and trading venues.

The top legislature said the futures law will help the sector better serve the real economy and safeguard the country's financial security. It will also address the need for better linking of the domestic and international circulations with the help of the futures market. This is the right time for the futures law to take effect, said experts.

According to data released by the China Futures Association in early February, the total trading value of futures in the Chinese market hit a record of 437.53 trillion yuan ($67.32 trillion) last year, up 50.56 percent on a yearly basis. China accounted for 13.2 percent of the total futures trading value in the world last year.

Last year, China surpassed all other economies in terms of commodities futures trading value for the 11th year in a row. Meanwhile, 12 new futures products were launched last year, including four commodities futures and eight commodities options, according to the association.

While attending the 16th China (Shenzhen) International Derivatives Forum in late December, the China Securities Regulatory Commission Vice-Chairman Fang Xinghai said that the futures law will facilitate the reform and opening-up of the Chinese futures market top down. It will define the legal status of market participants, basic legal relationships and liability, supervision on over-the-counter market, market entry rules and cross-border supervision.

Scott O'Malia, CEO of the International Swaps and Derivatives Association Inc, said at the same forum late last year that a normally operating derivatives market should be secured by a predictable and powerful legal framework, which includes executable close-out netting rules. A prosperous Chinese derivative market will be highly dependent on the close-out netting rules and the legal certainty regarding execution, he said.

Close-out netting is a technique used to determine the net obligations of a defaulted counterparty to a derivatives transaction.