China Releases Measures for Strengthening Credibility Supervision in Securities and Futures Market

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By Yao Lu

Aug. 2 – In order to strengthen the integrity and maintain the order of the securities and futures market, as well as protect the legitimate rights and interests of investors, China’s Securities Regulatory Commission (CSRC) issued the “Interim Measures for the Supervision and Administration of Securities and Futures Market Credibility (CSRC Order No. 80, hereinafter referred to as ‘Measures’)” on July 25. The Measures provide for the building of a nationally uniform securities and futures market credibility file database (hereinafter referred to as the “credibility file”), the purpose of which is to curb dishonest activities such as fraud, insider dealing and market manipulation. The Measures are scheduled to take effect on September 1, 2012.

According to the Measures, the credit information of the following citizens, legal persons and other organizations engaged in activities in the securities and futures markets should be recorded in the credit files:

  1. Securities practitioners and futures practitioners;
  2. Issuers, listed companies and their directors, supervisors, senior executives, major shareholders and actual controllers;
  3. Securities companies, fund management companies, futures companies and their directors, supervisors, senior executives, major shareholders and actual controllers;
  4. Accounting firms, law firms, institutional sponsors, financial consulting agencies, assets evaluation agencies, investment consulting agencies, credit rating agencies and other securities and futures service providers and their staff members;
  5. Independent fund sales institutions, fund evaluation institutions and their relevant business personnel, non-public offer fund managers, qualified foreign institutional investors, qualified domestic institutional investors and their major investment managers, representative organizations and chief representatives of overseas securities institutions;
  6. Suppliers engaged in providing information technology service or hardware and software products to the securities and futures market industry;
  7. Service organizations and their personnel engaged in providing investor relations management service and other public relation service for issuers and listed companies;
  8. Other citizens, legal persons and organizations who have records of illegal or dishonest conducts related to activities in the securities and futures markets.

For the purpose of the Measures, credit information includes:

  1. Name, gender, nationality and identity certificate number of citizens, or name, domicile, organization code and other basic information of legal persons or other organizations;
  2. Commendations, rewards or appraisals granted by the CSRC, other competent departments under the State Council at the provincial or ministerial level or above, and national industrial organizations in the securities and futures markets, and credit ratings given by credit rating agencies;
  3. Administrative licensing decisions made by the CSRC or its local offices;
  4. Information on the status of fulfillment of public commitments made by issuers, listed companies and their major shareholders, actual controllers, directors, supervisors and senior executives, and parties to major assets restructuring transactions;
  5. Decisions on administration penalties or prohibition to market assess made as well as supervisory and administration measures adopted by the CSRC or its local offices;
  6. Disciplinary measures and administrative measures stipulated in relevant laws, administrative regulations and rules implemented by industrial organizations in the securities and futures market;
  7. Investigations and imposition of coercive measures by the CSRC or its local offices as a result of being suspected of violating laws on securities and futures;
  8. Investigations by public security organs or People’s Procuratorates forwarded from the CSRC or its local offices as a result of being suspected of crimes related to securities and futures;
  9. Criminal penalties imposed by the people’s courts due to crimes related to securities and futures, or other crimes;
  10. Civil liabilities for relatively large amounts of compensation imposed by the people’s courts due to tortious acts or breaches related to securities and futures;
  11. Administrative punishments imposed by departments of banking, insurance, finance, tax, environmental protection, industrial and commerce, customs or other competent departments due to illegal business operations;
  12. Other information on conducts in violation of the honest credit principle.

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