In order to further regulate securities brokerage business activities and to prevent financial risks, the China Securities Regulatory Commission drafted the Measures for Management of Securities Brokerage Business (Draft) (hereinafter the “Draft”), and released it for public consultation on July 26. The public consultation period ends on August 26, 2019.

The main contents of the Draft include: (1) Try to define securities brokerage business for the first time. With reference to Article 112 and other related provisions of the Securities Law, clear rules were provided as a basis for cracking down on illegal securities brokerage business. (2) Protect the legitimate rights and interests of investors. Securities brokerage companies are required to protect the investors’ right to information, right to property security and right to fair deals; necessary systematic protection should be provided for specific matters such as collection of transaction commissions, protection of clients’ property, provision of account statements, handling account transfers and cancellations, and handling of complaints, etc. (3) Fully regulate major business stages. Rules were provided for the marketing, account opening, transaction and settlement stages involved in securities brokerage business. (4) Strengthen internal management and control responsibilities of securities brokerage companies. Regulations were set forth in terms of separation walls, personnel management, organizational guarantees, compliance auditing, information systems and operation locations, etc. (5) Strengthen supervision and management and responsibility investigation. The corresponding administrative supervision and administrative punishment measures were both provided within the scope permitted by the law, and the “double punishment” principle should be applied; in addition to the responsibilities of the companies, the responsibilities of the relevant individuals should also be investigated.

Source: Ministry of Justice