Provisions on the Classification-based Regulation of Securities Companies (Revised in 2017)
Provisions on the Classification-based Regulation of Securities Companies (Revised in 2017)
Provisions on the Classification-based Regulation of Securities Companies (Revised in 2017)
Announcement of the China Securities Regulatory Commission [2017] No. 11
July 6, 2017
(Issued on May 26, 2009 and revised in accordance with the Decision on Revising the Provisions on the Classification-based Regulation of Securities Companies of the China Securities Regulatory Commission dated May 14, 2010 and July 6, 2017)
Chapter I General Provisions
Article 1 For the purpose of effectively implementing the routine supervision of securities companies, rationally allocating supervision resources, improving supervision efficiency and promoting sustainable and regular development of securities companies, the Provisions on the Classification-based Regulation of Securities Companies (these "Provisions") are hereby formulated in accordance with the Securities Law of the People's Republic of China (2005), Regulations on Administration and Supervisions of Securities Companies and relevant laws and administrative regulations.
Article 2 "Categorization of securities companies" means types of securities companies that are assessed and determined on the basis of risk control capability, in line with market competition capability and sustainable compliance and in accordance with these Provisions.
The China Securities Regulatory Commission shall, in accordance with market development and the principle of prudential supervision, formulate and timely adjust the assessment indicators and standards for securities companies on the basis of soliciting industrial opinions.
Article 3 The China Securities Regulatory Commission and its dispatched offices shall, in accordance with the result of categorization of securities companies, implement different policies for various types of securities companies.
Article 4 The China Securities Regulatory Commission and its dispatched offices shall organize the categorization of securities companies.
The China Securities Regulatory Commission shall establish an expert review mechanism and form an expert review board during categorization review to study and handle major problems encountered in the categorization of securities companies. The expert review board shall consist of relevant personnel of the China Securities Regulatory Commission and its dispatched offices, the securities industrial self-regulating organization and the securities companies.
The categorization of securities companies shall adhere to the principles of legality and compliance and objectiveness and fairness. Functionaries concerned shall have corresponding professional quality, professional capability and supervision experience and shall sustain principles, and be honest and diligent.
Chapter II Assessment Indicators
Article 5 The risk management capability of securities companies shall be mainly assessed on the basis of such following six indicators as capital adequacy, corporate governance and compliance management, comprehensive risk management, safety of information systems, protection of clients' rights and interests, and information disclosure, and the assessment shall be made in accordance with the Assessment Indicators and Standards of the Risk Management Capability of Securities Companies (see the Attachment) so as to reflect securities companies' management capability in respect of liquidity risk, compliance risk, market risk, credit risk, technology risk and operation risk.
1. Capital adequacy. This mainly reflects net capital and risk control indicators focusing on net capital and liquidity to show the capital strength and its fluidity.
2. Corporate governance and compliance management. This mainly reflects corporate governance and compliance of securities companies to show their compliance risk management capability.
3. Comprehensive risk management. This mainly reflects the identification, measurement, monitoring, early warning, reporting, prevention and handling of different risks of securities companies to show their management capability of liquidity risks, market risks, credit risks and reputation risks.
4. Safety of information system. This mainly reflects IT management and information technology system operation of securities companies to show their technology risk management capability.
5. Protection of clients' rights and interests. This mainly reflects safety of clients' funds, services for clients and client management of securities companies to show their operation risk management capability.
6. Information disclosure. This mainly reflects the authenticity, accuracy, integrity and timeliness of information reported by securities companies to show their capability to manage accounting risk and integrity risk.
Article 6 The market competitive capability of securities companies shall be assessed mainly in respect of their brokerage business, investment banking business, asset management business, comprehensive strength and innovation capability.
Article 7 Ongoing compliance of securities companies shall be assessed in respect of the criminal penalties imposed by judicial authorities, administrative sanctions and regulatory measures imposed by the China Securities Regulatory Commission and its dispatched offices and disciplinary punishment imposed and self-regulatory measures taken by self-regulatory organizations for securities and futures.
Chapter III Assessment Methods
Article 8 It is assumed that the benchmark score of normal securities companies is 100.
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Announcement of the China Securities Regulatory Commission [2017] No. 11
July 6, 2017
(Issued on May 26, 2009 and revised in accordance with the Decision on Revising the Provisions on the Classification-based Regulation of Securities Companies of the China Securities Regulatory Commission dated May 14, 2010 and July 6, 2017)
Chapter I General Provisions
Article 1 For the purpose of effectively implementing the routine supervision of securities companies, rationally allocating supervision resources, improving supervision efficiency and promoting sustainable and regular development of securities companies, the Provisions on the Classification-based Regulation of Securities Companies (these "Provisions") are hereby formulated in accordance with the Securities Law of the People's Republic of China (2005), Regulations on Administration and Supervisions of Securities Companies and relevant laws and administrative regulations.
Article 2 "Categorization of securities companies" means types of securities companies that are assessed and determined on the basis of risk control capability, in line with market competition capability and sustainable compliance and in accordance with these Provisions.
The China Securities Regulatory Commission shall, in accordance with market development and the principle of prudential supervision, formulate and timely adjust the assessment indicators and standards for securities companies on the basis of soliciting industrial opinions.
Article 3 The China Securities Regulatory Commission and its dispatched offices shall, in accordance with the result of categorization of securities companies, implement different policies for various types of securities companies.
Article 4 The China Securities Regulatory Commission and its dispatched offices shall organize the categorization of securities companies.
The China Securities Regulatory Commission shall establish an expert review mechanism and form an expert review board during categorization review to study and handle major problems encountered in the categorization of securities companies. The expert review board shall consist of relevant personnel of the China Securities Regulatory Commission and its dispatched offices, the securities industrial self-regulating organization and the securities companies.
The categorization of securities companies shall adhere to the principles of legality and compliance and objectiveness and fairness. Functionaries concerned shall have corresponding professional quality, professional capability and supervision experience and shall sustain principles, and be honest and diligent.
Chapter II Assessment Indicators
Article 5 The risk management capability of securities companies shall be mainly assessed on the basis of such following six indicators as capital adequacy, corporate governance and compliance management, comprehensive risk management, safety of information systems, protection of clients' rights and interests, and information disclosure, and the assessment shall be made in accordance with the Assessment Indicators and Standards of the Risk Management Capability of Securities Companies (see the Attachment) so as to reflect securities companies' management capability in respect of liquidity risk, compliance risk, market risk, credit risk, technology risk and operation risk.
1. Capital adequacy. This mainly reflects net capital and risk control indicators focusing on net capital and liquidity to show the capital strength and its fluidity.
2. Corporate governance and compliance management. This mainly reflects corporate governance and compliance of securities companies to show their compliance risk management capability.
3. Comprehensive risk management. This mainly reflects the identification, measurement, monitoring, early warning, reporting, prevention and handling of different risks of securities companies to show their management capability of liquidity risks, market risks, credit risks and reputation risks.
4. Safety of information system. This mainly reflects IT management and information technology system operation of securities companies to show their technology risk management capability.
5. Protection of clients' rights and interests. This mainly reflects safety of clients' funds, services for clients and client management of securities companies to show their operation risk management capability.
6. Information disclosure. This mainly reflects the authenticity, accuracy, integrity and timeliness of information reported by securities companies to show their capability to manage accounting risk and integrity risk.
Article 6 The market competitive capability of securities companies shall be assessed mainly in respect of their brokerage business, investment banking business, asset management business, comprehensive strength and innovation capability.
Article 7 Ongoing compliance of securities companies shall be assessed in respect of the criminal penalties imposed by judicial authorities, administrative sanctions and regulatory measures imposed by the China Securities Regulatory Commission and its dispatched offices and disciplinary punishment imposed and self-regulatory measures taken by self-regulatory organizations for securities and futures.
Chapter III Assessment Methods
Article 8 It is assumed that the benchmark score of normal securities companies is 100.
......