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In May 2018, SZSE, along with local offices of CSRC, initiated a special on-site inspection on 7 members’ management of customer transaction behaviors and investor suitability. This is the second site inspection on members since last year’s inspection, indicating that SZSE has officially established a regular site inspection system to further push forward and improve the “member-regulation-oriented” transaction behavior regulation model.
Establishing such a mechanism is an important measure taken by SZSE to implement the decisions and deployment of CSRC and strengthen its comprehensive and strict supervision according to laws. It is also a move to fully implement the relevant requirements stated in the new Measures on Administration of Securities Exchanges and Charter of Shenzhen Stock Exchange to earnestly undertake the front-line regulatory responsibility. In this way, SZSE urges the members to give full play to the role of “gatekeeper” in the securities market so as to establish the first defending line for the prevention and control of transaction risks. It is of great significance in pushing forward the “member-regulation-oriented” model and urging the members to fulfill their duties.
This regular inspection mechanism is problem-oriented. It regularly conducts annual inspections on members with frequent abnormal customer transaction behaviors and poor management results. Another inspection will be carried out in the second half of this year. This inspection focused on the typical problems and weak links found in the 2017 inspection. Random checks were also conducted on the implementation of the new regulations on investor suitability management in an in-depth, detailed and thorough way. The goal was to strengthen compliance, urge members to make corrections, and enhance the deterrence of the self-regulatory rules, in addition to pushing members to find out the root causes, do better and enhance their awareness and ability of customer management. Meanwhile, by this inspection, SZSE also spread the latest regulatory ideas and requirements among members to deepen their understanding of the regulatory system, especially that of front-line staff, thus laying a solid foundation for the release and implementation of subsequent regulations.
After this inspection is completed, SZSE will give feedback to relevant members and request them to submit detailed corrective plans. For members with problems, SZSE will take self-regulatory measures to urge them to make corrections and standardize operations. SZSE will also notify its members of outstanding issues and weak links found in this inspection by organizing special training, meetings, visits and investigations to guide all members to conduct self-inspection and make rectifications, so as to continuously improve the customer management level of the entire industry.
An officer from SZSE expressed that in recent years, SZSE has earnestly implemented the CSRC requirements on the “member-regulation-oriented” model and actively fulfilled the front-line regulatory responsibility, while complementing the system’s shortcomings, and innovating regulatory measures. SZSE has set up a sound, standardized, institutionalized, and regular on-site inspection mechanism, made continuous efforts to strengthen the supervision and accountability of members in performing their duties and has achieved initial results. The supervision and regulatory work of SZSE is gradually gaining the understanding, recognition and support from the members. Members’ awareness of regulatory cooperation and willingness to be supervised and regulated are further improved. The positive situation in which our members and SZSE jointly maintain the order of market transactions has been formed.
Next, SZSE shall, adhering to the guiding principles of the Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, and in strict accordance with the spirit of the 19th CPC Nation Congress, the Central Economic Work Conference, and the National Financial Work Conference, deepen reform of the financial system, improve regulatory rules and systems, and enhance daily supervision and inspection. SZSE shall continue to push forward the “member-regulation-oriented” model, guide members to undertake the mission and responsibilities of preventing market risks with unified thinking and consensus, fight the tough battle to prevent and resolve risks, and ensure the sound and stable development of the multi-tiered capital market in the long run.
