Name: Trial Provisions on Compliance Management of Securities Companies (Draft for Consultation) (《证券公司合规管理试行规定 (征求意见稿) 》, the “Draft Provisions”)
Issuing authority: China Securities Regulatory Commission (“CSRC”)
Consultation period: Ending on 23 May 2008
Subject: Compliance management of securities companies
The position of “chief compliance officer” was officially recognised as a senior management personnel position under the relevant CSRC rules in 2004. The Draft Provisions represent the first time that the CSRC specifies in detail the qualification requirements and responsibilities of this position. The formulation of the Draft Provisions by the CSRC is perceived to be a step towards a new regulatory model for securities companies, in which the chief compliance officer plays a significant role. The qualification requirements, powers and responsibilities of the chief compliance officer, as well as the detailed requirements of various compliance systems of a securities company, are set out in the Draft Provisions.
Highlights
- The Draft Provisions require each securities company to implement internal compliance management systems, including (i) an effective emergency response, reporting and accountability system for compliance risks, (ii) a review and assessment system in respect of the compliance management of departments and branches and (iii) a whistle-blowing system for non-compliant activities.
- The Draft Provisions require each securities company to have a chief compliance officer who (i) must be a qualified senior management personnel of the company, (ii) must be familiar with the securities business and securities laws and regulations and (iii) must have at least 5 years of work experience in securities and either passed the relevant examinations or have at least 8 years of work experience in law, or alternatively have at least 8 years of experience in a supervisory role in a securities regulatory authority, such as the CSRC or its local branches.
- A securities company must set up a compliance management department or designate an existing internal department to be responsible for compliance related matters. The compliance management department should be led by, and answerable to, the chief compliance officer. The responsibilities of the compliance management department are required to be separated from those of other departments of the securities company, such as the internal control department.
- The chief compliance officer is required to review and comment, from a compliance perspective, on matters such as internal management systems, proposals for new products and businesses, major decisions and application materials and reports to be filed with the CSRC. The responsibilities of the chief compliance officer also include conducting periodical and interim review on employee activities, setting up and implementing anti-money laundering and information firewall measures within the company, organising internal training on compliance and submitting quarterly and annual compliance reports to the CSRC in accordance with the requirements prescribed by the Draft Provisions.
- Securities companies are required to uphold the independence of the chief compliance officer and to provide sufficient support for the compliance management work.
- The CSRC will evaluate the effectiveness of the compliance management of securities companies and will put weight on the results when it classifies the securities companies.
Please contact Zili Shao ( zili.shao@linklaters.com tel: +86 21 2891 1868) or Fang Jian ( jian.fang@linklaters.com tel: +86 21 2891 1858) if you would like further details.
