Recently, with the approval of the China Securities Regulatory Commission (CSRC), the Shanghai Stock Exchange (SSE) revised the "SSE Rules for Management of Members" (the "Member Management Rules" for short). The revision of the "Member Management Rules" focuses on improving the basic system, preventing financial risks, and tightening the members’ intermediary responsibilities, and aims to effectively check the market access, strengthen the regulation over the whole process of trading, and thoroughly implement the requirements for strengthening the reform of the capital market in an all-round manner.
As the basic rules for the SSE to carry out management of members and the leading and core part of the rules system for the members’ self-discipline management, the “Member Management Rules” plays an important role in safeguarding the trading security, maintaining the order of the securities market, protecting the legitimate rights and interests of the investors and other areas. In recent years, President Xi Jinping has made a number of important instructions on the capital market. Major changes have taken place in the regulatory situation and industry conditions, and a series of measures have been advanced rapidly to propel the reform of the capital market, especially the official launch of the SSE STAR Market and the pilot registration-based IPO system. The new circumstances require the SSE to further consolidate the institutional foundation and strengthen the self-discipline management of members.
The revision of the "Member Management Rules" focuses on the following issues. First of all, the system for the members’ management of clients is improved to strengthen the investor protection. The members’ responsibilities for client management are further defined. It is required that the members should “learn about the clients’ information in advance, monitor the trading in the process, and report irregularities afterwards”, and refine the circumstances in which the member has the right to refuse to accept a client's entrustment; the requirements for the product grading and the suitability matching for the investors are specified, the conditions and elements for the access of investors are improved, and the management of investor education is strengthened. Secondly, the compliance management and risk control of the members are intensified, and the development of relevant businesses is regulated. The internal control and risk management requirements for the businesses such as underwriting and sponsorship of securities, stock options, cross-border business, and collateralized repo of shares are specified, and the members’ responsibilities for internal compliance management and risk prevention in relevant businesses are tightened. Thirdly, the requirements for the members’ management of the technical system are intensified to ensure the safe trading. It is required that the performance, capacity and expansion capabilities of members’ trading and related systems should be adapted to their business development and market demands, so as to ensure the continued and stable operation of the trading and related systems. Fourthly, the contents of self-disciplinary regulation are enriched to improve the efficiency of self-discipline management. It is stipulated that other trading participants should refer to the requirements for the members in accepting the self-discipline regulation by the SSE, and the representatives of the members, the business contacts for the members and other relevant personnel are included in the regulatory targets, with the regulatory measures and the types of disciplinary actions further improved.
Going forward, the SSE will, under the guidance of Xi Jinping’s Thought on the Socialism with Chinese Characteristics for the New Era and the leadership of the CSRC, effectively turn the achievements of the education campaign themed "staying true to our founding mission" into a powerful driving force for comprehensively strengthening the reform of the capital market, take the launching of the SSE STAR Market and piloting the registration-based IPO system as a breakthrough point, focus on improving the self-discipline management level of the members, and strive to build a capital market that is regulated, transparent, open, dynamic and resilient.