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Shenzhen Stock Exchange held a special symposium on April 25, inviting representatives of such brokerage houses as Guosen, China Merchants, and China Jianyin Investment to exchange views on studying and implementing the two newly-issued rules of the State Council: the Ordinance on the Supervision and Management of Securities Companies, and the Ordinance on Risk Disposal of Securities Companies.
The attendees discussed extensively over the meaning, interpretation, and implementation methods of the two Ordinances, and reached the consensus that under the leadership of the China Securities Regulatory Commission, remarkable progress has been made in securities oversight, with market system construction being improved constantly, behaviors of market participants increasingly regulated, and investor protection strengthened. During the latest few years, the CSRC has led a comprehensive overhaul of the securities industry, notably enhancing the overall state of brokerage firms and their risk resistance capability.
The formulation of the two Ordinances summarizes the reform measures and successful approaches adopted in the industry overhaul, and can also serve as the major measures of the regulators to improve market fundamental system construction. In addition, the two Ordinances are of great significance to strengthening the fundamentals of securities firms, enhancing their internal governance and risk control, and preparing them for new opportunities for innovation and development.
In the opinion of many present representatives, the Ordinance on the Supervision and Management of Securities Companies gives a detailed prescription of the establishment, organizational structure, business operation, risk control, customer assets protection and exit mechanism of securities firms, and yet leave room for service and product innovation for financing, and securities lending & borrowing. Meanwhile, the Ordinance on Risk Disposal of Securities Companies sets out five types of measures including business suspension & rectification, trusteeship, takeover, administrative restructuring, and revocation for brokerages, thus providing the legal basis for settling related issues.The two Ordinances clarify relevant supervisory standards, regulate the oversight procedures, enhance oversight efficiency, and will play a major role in promoting compliant operations and healthy development of securities firms, protecting the legitimate interests of customers, preventing and controlling systematic risks in the sector. Moreover, the attendees suggest related regulatory authorities release detailed implementation rules in order to offer operational guidance.
A SZSE official pointed out, the timely launch of the two Ordinances is critical to further reinforcing self-discipline supervision of the bourse members, regulating members’ behaviors, preventing and diverting potential risks, protecting the legitimate interests of customers and the benefits of the social public, and promoting the healthy development of the securities industry. According to the same source, the SZSE would, in the next stage, continue to improve the regulation system, strengthen regulatory tools, and boost the management capability of members and clients in the following aspects:- to perfect the self-discipline regulatory system, enhance membership compliance management level, and actively explore to set up a dynamic management mechanism for membership trading authorities for better early risk control;
- to specify and upgrade regulatory measures, enhance on-site inspections, and reinforce oversight of members’ specific businesses;
- to take proactive measures to boost the capability of managing members and clients, and promote education of members and investors
