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In order to regulate the eligibility management of investors in structured fund market and actually protect investors’ legal rights and interest, Shenzhen Stock Exchange (‘SZSE’) recently promulgated the Guidelines of SZSE for Structured Fund Business Management (Exposure Draft) (hereinafter referred to as ‘The Guidelines’) and solicited opinions from the public. According to the philosophy of “partial obligations undertaken by the seller and total risk born by the buyer”, The Guidelines clearly defines the eligibility arrangement for investors in structured fund secondary market, such as related requirements for investors to sign the Risk Revealment Statement for Investment in Structured Fund, and risk warning arrangement for fund managers and securities companies.
Related official of SZSE said, The Guidelines mainly includes the following aspects: firstly, it improves the investors eligibility system and strengthens investors access management and risk revealment for investors. It learns from the experience and practice of eligibility management of investors investing in future, securities margin trading and other high-risk financial products or business, sets up the investment threshold of securities assets of CNY300,000, and requires individual investors and common institutional investors to pass the comprehensive evaluation and sign the Risk Revealment Statement for Investment in Structured Fund before opening structured fund transactions and relevant permissions. Investors who don’t meet the above investors eligibility conditions still can independently choose to continue to hold or sell or combine to redeem their structure fund units. Secondly, it strengthens the risk warning measures and enhances the pertinence and effectiveness of risk warning for investors. Integrated with the operation and management experience of reverse split of structured fund, it requires structured fund B units occurring reverse split to add ‘star’ to the fund abbreviation on the split base date, requires fund managers to issue risk warning announcement for structured fund with high premium in B units that may occur or has occurred reverse split, requires such B units to add trading suspension for one hour on the split base date, and requires members to timely deliver risk warning information to investors according to relevant requirements of SZSE. Thirdly, it improves investor education system and promotes fund managers and members to perform the responsibilities for investor education. It requires fund managers and members to fully reveal the investment risk of structured fund and strengthen investor service as well as properly solve relevant disputes. Fourthly, it clearly defines investors’ responsibilities and obligations to enhance their risk awareness. It requires investors to follow the principle of ‘total risk born by the buyer’, cooperate with members to provide related proof materials for eligibility management of investors and undertake the responsibility for the accuracy, authenticity and legitimacy. Besides, according to the current operation and management mechanism for structured fund, The Guidelines further defines the procedures for structured fund split business to facilitate investors to accurately understand the split mechanism for structured fund.
The official also said, in order to ensure full preparation of relevant departments and normal market trade, The Guidelines will leave a certain transitional period from its promulgation to formal implementation. Meanwhile, in order to facilitate all market participators to better understand The Guidelines, SZSE simultaneously drafts and promulgates relevant Q&A for everyone’s reference.
The opinions for The Guidelines will be solicited until October 9, 2016. SZSE will timely perfect it according to the opinions from the public.
