Decision on Revising the Provisions on the Classification-based Regulation of Securities Companies
Decision on Revising the Provisions on the Classification-based Regulation of Securities Companies
Decision on Revising the Provisions on the Classification-based Regulation of Securities Companies
Announcement of the China Securities Regulatory Commission [2020] No.42
July 10, 2020
The Decision on Revising the Provisions on the Classification-based Regulation of Securities Companies is hereby promulgated and shall come into effect as of the date of promulgation.
Decision on Revising the Provisions on the Classification-based Regulation of Securities Companies
1. Article 1 is revised to read: “These Provisions are formulated in accordance with Article 130 of the Securities Law and Article 12 of the Regulations on the Supervision and Administration of Securities Companies and other pertinent laws and administrative regulations with a view to effectively implementing prudential regulation of securities companies, rationally allocating regulatory resources, improving regulatory efficiency, promoting each securities company to engage in business activities commensurate with its governance structure, internal control, compliance management, risk management and risk control indicators, etc., and achieving sustainable and regulated development.”
II. Paragraph 1 of Article 2 is revised to read: “Classification of securities companies refers to the determination of a securities company’s category upon evaluation in accordance with these Provisions on the basis of its risk management capability and on-going compliance status while in light of its business development status.”
III. Item 4, Paragraph 1 of Article 5 is revised to read: “Information technology management. It mainly reflects a securities company's information technology governance, information technology security and data governance, embodying its technical risk management capability.”
Item 5, Paragraph 1 of Article 5 is revised to read: “Protection of customers’ rights and interests. It mainly reflects a securities company's customer asset security, customer service and customer management level, embodying its operational risk management capability.”
IV. Article 6 is revised to read: “A securities company's on-going compliance status shall be evaluated mainly based on criminal penalty measures taken by judicial authorities, administrative punishments imposed and regulatory measures taken by the CSRC and its local offices, as well as disciplinary sanctions imposed and self-regulation management measures taken by self-regulation organizations of the securities and futures industry.”
V. Article 7 is revised to read: “A securities company's business development status shall be evaluated mainly based on its brokerage business, investment banking business, asset management business, comprehensive strength and innovation capability, etc.”
IV. Article 8 is revised to read: “It is assumed that the benchmark score of a securities company under normal operation is 100 points. On the basis of the benchmark score, a securities company's evaluation score shall be determined through adding or deducting points correspondingly in light of its risk management capability evaluation indicators and criteria, on-going compliance status and business development status, etc.”
VII. Item 1, Paragraph 1 of Article 9 is revised to read: “Where the company or any of its directors, supervisors or senior executives is subjected to issuance of a warning letter, or ordered to make public statements or to submit reports on a regular basis due to being liable for the company's act in violation of laws and regulations, 0.5 points shall be deducted each time;”
Item 2, Paragraph 1 of Article 9 is revised to read: “Where the company is ordered to make corrections or to increase the number of internal compliance inspections, 1 point shall be deducted each time;”
Item 4, Paragraph 1 of Article 9 is revised to read: “Where the company is ordered to replace any of its directors, supervisors, senior executives or restrict the rights thereof, restrict the rights of any shareholder or transfer any equity, 2 points shall be deducted each time;”
Item 5, Paragraph 1 of Article 9 is revised to read: “Where the company is subjected to public condemnation, restriction of engagement in business activities for less than six months, or suspension of acceptance of administrative licensing-related documents for less than six months, or any of its directors, supervisors or senior executives are identified as ineligible for less than one year or subjected to public condemnation due to being liable for the company's act in violation of laws and regulations, 2.5 points shall be deducted each time;”
Item 6, Paragraph 1 of Article 9 is revised to read: “Where the company is subjected to restriction of engagement in business activities for more than six months or suspension of acceptance of administrative licensing-related documents for more than six months, or any of its directors, supervisors or senior executives are identified as ineligible for more than one year due to being liable for the company's act in violation of laws and regulations, 3 points shall be deducted each time;”
Paragraph 2 of Article 9 is revised to read: “Where a holding subsidiary of the securities company is included in the parent company for combined evaluation and subjected to any of the above-mentioned measures, points shall be deducted as per the above principles; where a branch of the securities company such as its branch company or business department is directly subjected to any of the above-mentioned measures, points shall be deducted by half as per the above principles to the maximum of 5 points cumulatively; where any of the executives, main business personnel of the securities company or any of the directors, supervisors or senior executives of its holding subsidiary included for combined evaluation are directly subjected to any of the above-mentioned measures due to being liable for any act in violation of laws and regulations committed by the company, its subsidiary or branch, points shall be deducted by half as per the above principles to the maximum of 5 points cumulatively.”
An extra paragraph is added as Paragraph 3 of Article 9: “Where a securities company is subjected to administrative punishments imposed or major administrative regulatory measures such as restriction on engagement in business activities taken by the CSRC or its local office beyond the evaluation period, points shall be deducted in full as per the above principles.”
VIII.
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Announcement of the China Securities Regulatory Commission [2020] No.42
July 10, 2020
The Decision on Revising the Provisions on the Classification-based Regulation of Securities Companies is hereby promulgated and shall come into effect as of the date of promulgation.
Decision on Revising the Provisions on the Classification-based Regulation of Securities Companies
1. Article 1 is revised to read: “These Provisions are formulated in accordance with Article 130 of the Securities Law and Article 12 of the Regulations on the Supervision and Administration of Securities Companies and other pertinent laws and administrative regulations with a view to effectively implementing prudential regulation of securities companies, rationally allocating regulatory resources, improving regulatory efficiency, promoting each securities company to engage in business activities commensurate with its governance structure, internal control, compliance management, risk management and risk control indicators, etc., and achieving sustainable and regulated development.”
II. Paragraph 1 of Article 2 is revised to read: “Classification of securities companies refers to the determination of a securities company’s category upon evaluation in accordance with these Provisions on the basis of its risk management capability and on-going compliance status while in light of its business development status.”
III. Item 4, Paragraph 1 of Article 5 is revised to read: “Information technology management. It mainly reflects a securities company's information technology governance, information technology security and data governance, embodying its technical risk management capability.”
Item 5, Paragraph 1 of Article 5 is revised to read: “Protection of customers’ rights and interests. It mainly reflects a securities company's customer asset security, customer service and customer management level, embodying its operational risk management capability.”
IV. Article 6 is revised to read: “A securities company's on-going compliance status shall be evaluated mainly based on criminal penalty measures taken by judicial authorities, administrative punishments imposed and regulatory measures taken by the CSRC and its local offices, as well as disciplinary sanctions imposed and self-regulation management measures taken by self-regulation organizations of the securities and futures industry.”
V. Article 7 is revised to read: “A securities company's business development status shall be evaluated mainly based on its brokerage business, investment banking business, asset management business, comprehensive strength and innovation capability, etc.”
IV. Article 8 is revised to read: “It is assumed that the benchmark score of a securities company under normal operation is 100 points. On the basis of the benchmark score, a securities company's evaluation score shall be determined through adding or deducting points correspondingly in light of its risk management capability evaluation indicators and criteria, on-going compliance status and business development status, etc.”
VII. Item 1, Paragraph 1 of Article 9 is revised to read: “Where the company or any of its directors, supervisors or senior executives is subjected to issuance of a warning letter, or ordered to make public statements or to submit reports on a regular basis due to being liable for the company's act in violation of laws and regulations, 0.5 points shall be deducted each time;”
Item 2, Paragraph 1 of Article 9 is revised to read: “Where the company is ordered to make corrections or to increase the number of internal compliance inspections, 1 point shall be deducted each time;”
Item 4, Paragraph 1 of Article 9 is revised to read: “Where the company is ordered to replace any of its directors, supervisors, senior executives or restrict the rights thereof, restrict the rights of any shareholder or transfer any equity, 2 points shall be deducted each time;”
Item 5, Paragraph 1 of Article 9 is revised to read: “Where the company is subjected to public condemnation, restriction of engagement in business activities for less than six months, or suspension of acceptance of administrative licensing-related documents for less than six months, or any of its directors, supervisors or senior executives are identified as ineligible for less than one year or subjected to public condemnation due to being liable for the company's act in violation of laws and regulations, 2.5 points shall be deducted each time;”
Item 6, Paragraph 1 of Article 9 is revised to read: “Where the company is subjected to restriction of engagement in business activities for more than six months or suspension of acceptance of administrative licensing-related documents for more than six months, or any of its directors, supervisors or senior executives are identified as ineligible for more than one year due to being liable for the company's act in violation of laws and regulations, 3 points shall be deducted each time;”
Paragraph 2 of Article 9 is revised to read: “Where a holding subsidiary of the securities company is included in the parent company for combined evaluation and subjected to any of the above-mentioned measures, points shall be deducted as per the above principles; where a branch of the securities company such as its branch company or business department is directly subjected to any of the above-mentioned measures, points shall be deducted by half as per the above principles to the maximum of 5 points cumulatively; where any of the executives, main business personnel of the securities company or any of the directors, supervisors or senior executives of its holding subsidiary included for combined evaluation are directly subjected to any of the above-mentioned measures due to being liable for any act in violation of laws and regulations committed by the company, its subsidiary or branch, points shall be deducted by half as per the above principles to the maximum of 5 points cumulatively.”
An extra paragraph is added as Paragraph 3 of Article 9: “Where a securities company is subjected to administrative punishments imposed or major administrative regulatory measures such as restriction on engagement in business activities taken by the CSRC or its local office beyond the evaluation period, points shall be deducted in full as per the above principles.”
VIII.
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