1. Raised the Ceiling on Investment of Proprietary Capital by Securities Investment Consulting Enterprises
To increase the efficiency with which securities investment consulting enterprises utilize their own capital, the FSC on October 16th, 2017 raised the ceiling on such enterprises’ use of their own capital to purchase shares in domestically issued securities investment trust funds, publicly-offered futures trust funds, and offshore funds to no more than 40% of their net worth as shown in their most recent audited and attested financial reports, up from a previous ceiling of 30%.
2. Amendments to some articles of the Regulations Governing Securities Firms Accepting Orders to Trade Foreign Securities, the Standards Governing the Establishment of Securities Investment Trust Enterprises, the Standards Governing the Establishment of Securities Investment Consulting Enterprises and the Standards Governing the Establishment of Futures Trust Enterprises
In order to allow securities firms brokering trades in foreign securities to set up separate account ledgers for each customer in their Settlement Account with customer consent, consider Alien Resident Certificate and Alien Permanent Resident Certificate as identification documents with the same effect as passports in line with the residency reform policy of the Ministry of the Interior, and facilitate the business activities of securities firms, the FSC introduced amendments to some articles of these Standards and Regulations on October 6th, 2017. Key content of the amendments are as follows:
(1) As high net worth corporate investors are similar to professional institutional investors in terms of their asset sizes, proficiency level of professional knowledge and investment experience, in line with the waivers of obligations for securities firms when dealing with professional institutional investors, the same waivers now also apply to high net worth corporate investors for alignment with the amendments of the Regulations Governing Offshore Structured Products announced on September 18th, 2015. The obligations waived for securities firm include (i) Assigning employees to explain the risks to high net worth corporate investors, (ii) delivering a risk disclosure statement, and (iii) when providing information or research reports on the securities market, industries or individual securities, summarily translating into Chinese are not required.
(2) Alien Resident Certificate and Alien Permanent Resident Certificate are considered identification documents with the same effect as passport, as in line with the residency reform policy of the Ministry of the Interior.
(3) In order to stream line the process of taking investors’ orders to trade foreign securities and reduce settlement risks, securities firms may, with consent of the customers, retain the customer''s settlement funds, which should be received and paid in a foreign currency designated by the customer for foreign securities trades, or the receivables generated by holding foreign securities, in the securities firm''s Settlement Account opened with at the correspondent bank and set up separate sub-accounts ledger for record-keeping.