The China Securities Regulatory Commission (CSRC) is responsible for overseeing China's securities and futures industry, ensuring the fair and orderly operation of its capital markets. It was established in 1998 and operates under the authority of China's State Council. The CSRC actively polices market participants and takes decisive action against illegal practices, safeguarding the integrity of China's financial markets.
The CSRC serves as the principal regulatory body responsible for overseeing China's securities and futures industry. Similar to the Securities and Exchange Commission (SEC) in the United States, the CSRC is entrusted with maintaining the fairness and orderliness of the country's financial markets. It comprises 36 regulatory bureaus distributed across different regions in China, along with two supervisory bureaus stationed at the nation's largest stock exchanges in Shanghai and Shenzhen.
Origins and Governance
The CSRC's establishment traces back to 1998 when China enacted its securities law. This makes the CSRC a relatively recent addition to China's regulatory landscape. It operates under the direct purview of China's State Council, the central administrative authority in China. Since January 2019, the Chairman of the CSRC is Yi Huiman.
The CSRC is headquartered in Beijing and is led by a single chair, accompanied by four vice-chairs. Additionally, the board includes a secretary of the Discipline Commission and three assistants to the chair. Comprising the CSRC's infrastructure are 18 functional departments, an inspection division, and three specialized centers.
The Key Roles of the CSRC
The China Securities Regulatory Commission plays a multifaceted role in overseeing and regulating the securities and futures industry in China. According to the CSRC's mandates, it is responsible for:
- Supervision of Foreign Firms: It supervises foreign securities and futures trading firms operating in China.
- Oversight of Professional Firms: It supervises accounting firms and law firms engaged in activities related to the securities and futures industry.
- Management of Regulatory Bureaus: The CSRC exercises control over the 36 affiliated bureaus and their respective managers.
- Approval and Regulation of Entities: It approves and regulates fund management companies, securities depositories, clearing corporations, credit rating agencies, and fund custodians.
- Market Data Collection: The CSRC gathers and publishes market statistics, ensuring transparency in market information.
- Oversight of Issuance and Trading: The CSRC monitors the issuance, trading, custody, and settlement of stocks, bonds, and other listed securities.
- Formulating and Implementing Regulations: The CSRC is entrusted with creating and enforcing laws and regulations governing the securities and futures markets.
- Enforcement and Investigation: The CSRC investigates and enforces its laws and regulations, penalizing violators accordingly.
- Domestic Futures Oversight: It supervises the listing, trading, and settlement of domestic futures contracts and monitors the activities of domestic institutions in overseas futures markets.
- Overseas Issuance and Listing: The CSRC oversees and approves the direct or indirect issuance and listing of shares overseas by domestic entities.
- Supervising Securities Companies: It ensures that securities companies adhere to compliance requirements and regulatory standards.
CSRC vs. Financial Market Illegal Activities
Regulatory authorities such as the CSRC play an essential role in preserving the integrity of China's financial markets as they continue to develop. The CSRC, akin to the SEC in the United States, takes a stern stance against unlawful practices and market manipulation.
A domestic company was fined a record-breaking 5.67 billion yuan (approximately $900 million) by the CSRC in March 2018 for manipulating the share prices of newly-listed banks, in a notable case. This action underscored the CSRC's commitment to combating illegal activities in the financial markets.
Several other instances have led to disgorgements, penalties, trading bans, and even imprisonment. Notably, in 2017, the head of the initial public offering (IPO) division at the Shenzhen and Shanghai exchanges faced a conviction for corruption in her regulatory role, resulting in a life sentence.
The China Securities Regulatory Commission serves as the guardian of China's securities and futures industry, ensuring the fair and orderly operation of its capital markets. Established in 1998, the CSRC operates under the authority of China's State Council and enforces a wide range of regulations to maintain market integrity. With a robust structure and a history of rigorous enforcement, the CSRC actively polices market participants and takes decisive action against illegal practices, safeguarding the integrity of China's financial markets.