SZSE Strengthens Institutional Construction of Membership Self-discipline Rules

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The FINANCIAL — Recently approved by China Securities Regulatory Commission and released by Shenzhen Stock Exchange, the Membership Management Rule (Revised in 2015) will come into force from the date of release.

As an important move for SZSE to deepen self-discipline management over members, strengthen investor protection and promote the standardization and development of the markets, this revision has positive significance on strengthening members’ compliance and risk management, safeguarding trading security and maintaining the order of the securities markets, according to Shenzhen Stock Exchange.

As one of the three basic business rules of SZSE, the Membership Management Rule was promulgated and implemented in 2007 and is imperative to be revised due to the significant changes in legal environment, market situations, industry conditions, etc. Adhering to the principles of marketization, legalization and transparency, the revision this time make some perfection in aspects of compliance and risk-control of members, investor education and suitability management, management of customer trading behaviors and technology system construction of members.

The contents being revised mainly cover the following aspects:

– first, to improve the investor suitability management and strengthen the protection of investors by 1) requesting members to establish a management mechanism based on customer classification and product grading, and 2) requesting members to prompt risk to investors in a timely manner and specifying the risk warning delivery mechanism for high-risk securities such delisting, etc.;

– second, to strengthen investor education and services and enhance investors’ risk awareness by requesting members to include investor education into each business segment, enrich the forms and contents of investors education and enhance its effectiveness, and establish a evaluation mechanism of investor education to arouse the initiative of members;

– third, to emphasize compliance management and risk control of members and safeguard trading security in the markets by requesting members to optimize the functions such as trading verification and authority management in their technical systems in a bid to implement front-end control of proprietary trading, asset management, etc., and establish a reporting mechanism of programming trading and innovative business in a bid to identify and prevent trading risks in a timely manner;

– fourth, to improve customer trading behavior management and guide investors to participate in the markets in compliance with laws and regulation by requesting members to perfect trading monitoring system to give timely notice or reminder to customers about abnormal trading behaviors, and establish a key monitoring mechanism for accounts of serious abnormal trading behaviors;

– fifth, to optimize the trading participant management system which can adapt to the development needs of new business such as “Shenzhen-Hong Kong Stock Connect” and options, and to perfect the system of diversified trading participants; and

– sixth, to actively promote decentralization and deregulation and increase the of the transparency of rules and the efficiency of regulation by reducing reporting requirements on members, specifying the eligibility for membership application, termination conditions and handling procedures, and adjusting to and enriching measures for self-discipline management.

An officer of SZSE emphasized that the year of 2015 is crucial for deepening reforms in an all-round way, and the regulatory transition and innovative development in the capital markets have stepped into a new era. Members of SZSE are confronting new situations, challenges and requirements in self-discipline supervision along with the rapid development of multi-tier capital markets, innovative products and business, and unprecedented surge of investors. For the next step, SZSE will

will actively adapt itself to the new situations of the capital markets, earnestly implement the work deployment of National Work Conference on Securities And Futures Regulatory, give full play to the elasticity and advantage of front-line regulation, prepare for orderly cohesion with administrative supervision, improve the mechanism of membership self-discipline management, enhance regulation efficiency, and promote the long-term and healthy development of capital markets.


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