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Principals from Shenzhen Stock Exchange (SZSE) expressed on an interview on “Rules on Securities Firms Supervision Management” which is effective as of June 1 2008 that SZSE would improve the self-disciplinary work of the bourse with the focus of optimizing member client management in the growth enterprise market board this year.
Measures to be taken include amending relevant rules such as “Member Management Rules” “Management guidance on client transaction” and etc. the aim is to further clarify specific requirements on client management and to enhance the transaction restriction management mechanism.
Members should be active to boost supervision platform of investor’s transaction and improve the actual effect and go-aheadism of members’ regulation on client transaction. The connected training system is put on great heed recently. Effective measures should be implemented to strengthen supervision on transactions exceeding 1 percent of listed companies’ total equity in a bid to curb illegitimate transaction.
Teaming up with China Securities Regulatory Commission and Securities Association of China should be optimized to integrate the self-disciplinary, and members are required to stick to the principle of “proper timing” and develop business, service, product innovation on the basis of understanding client to improve actual effect and aiming of client management.
Investor training should be promoted to require members to take effective measures to ensure senses of regulation and risk and provide support and guidance to the task.
Members should set up brokerage management system in collaboration with securities regulators to bolster client service and member client management performance.
It is said that China Securities Regulatory Commission fulfilled great accomplishment on risk control and business regulation by pushing the management on securities firms, client transaction settlement capital third-party payment, centered transaction management and divided supervisions and etc. Self-discipline of investors accelerated transfer of company management systems and modes. Securities firms realized parting of over-counter and off-counter business, transfer from divided service to intensified service, improvement of risk control and client management. In the meantime, business management was changed from marketing focus to service focus to cater for different needs from clients. However, there are still problems from the client management and investor training. In 2007, SZSE sent 2583 warnings through telephone against abnormal trading to its members, while 316 warning in written, investigated 2061 documents and raided 11 business offices. From January to May 2008, warnings through telephone amounted to 4004, written warning 384, documents investigation 337 and regulated guaranty materials 38.
Principals from SZSE noted that the Rules made specific regulation on client management of securities firms. For example, Article No.29 pointed the principles of understanding client and proper timing, and requires securities firms had good knowledge on background, financial standing and investment experience of clients while providing services such as asset management, margin trading, and sales of financial products.
Article No.30 gave prominence to the risk revealing by securities firms and prescribed that clients should be clear with the rules and contract stipulations before reaching agreements on securities trusting, asset management, margin trading and etc. The Rules also clarified the legal connection between brokers and firms, which will cast great influence on client service and investor training in the future.
It was also elucidated that the task could not be improved too fast, which needs group work by regulators, bourses and securities firms. SZSE will keep boosting task while members should accordingly enhance client management, improve quality of client services and investor training and eventually speed healthy development of securities market.
