Chapter VIII Securities Trading Service Institutions
Article 169 Where an investment consulting institution, financial advising institution, credit rating institution, asset appraisal institution or accounting firm engages in any securities trading service, it shall be subject to the approval of the securities regulatory authority under the State Council and the relevant administrative departments. The measures for the administration of examination and approval of the practice of securities trading services, in which an investment consulting institution, financial advising institution, credit rating institution, asset appraisal institution or accounting firm engages, shall be formulated by the securities regulatory authority under the State Council and the relevant administrative departments.
Article 170 The staff of an investment consulting institution, financial advising institution or credit rating institution who engage in securities trading service shall have the special knowledge of securities as well as work experience on securities business or securities trading service for more than 2 years. The standards for recognizing the securities practice qualification and the measures for administration thereof shall be formulated by the securities regulatory authority under the State Council.
Article 171 An investment consulting institution as well as its practitioners that engage in securities trading services may not have any of the following acts:
(1) Engaging in any securities investment as an agent on the behalf of its entrusting party;
(2) Concluding any agreement with an entrusting party on sharing the gains of securities investment or bearing the loss of securities investment;
(3) Purchasing or selling any stock of a listed company, for which the consulting institution provides services;
(4) Providing or disseminating any false or misleading information to investors through media or by any other means; or
(5) Having any other act as prohibited by any law or administrative regulation. Any institution or person that has any of the acts as prescribed in the preceding paragraph herein and thus incurs any loss to investors shall be subject to the liabilities of compensation.
Article 172 An investment consulting institution or credit rating institution that engages in securities trading services shall, according to the standards of or measures for charging as formulated by the relevant administrative department of the State Council, charge the relevant service commissions.
Article 173 Where a securities trading service institution formulates and generates any auditing report, asset appraisal report, financial advising report, credit rating report or legal opinions for the issuance, listing and trading of securities, it shall be diligent and responsible by carrying out examination and verification for the authenticity, accuracy and integrity of the contents of the documents as formulated and generated. In the case of any false record, misleading statement or major omission in the documents as formulated and generated, which incurs any loss to any other person, the relevant securities trading service institution shall bear the joint and several liabilities together with the relevant issuer and listed company, unless a securities trading service institution has the ability to prove its exemption of fault.
Chapter IX Securities Industry Association
Article 174 The securities industry association is a self-regulating organization for the securities industry and is a public organization with the status of a legal person. A securities company shall join the securities industrial association. The power organ of the securities industrial association is the general assembly of its members.
Article 175 The constitution of the securities industrial association shall be formulated by the general assembly of its members and shall be report to the securities regulatory authority under the State Council for archival purpose.
Article 176 The securities industrial association shall perform the following functions and duties:
(1) Educating and organizing its members to observe the laws and administrative regulations on securities;
(2) Safeguarding the legitimate rights and interests of its members and reporting the suggestions and requirements of its members to the securities regulatory body;
(3) Collecting and straightening out the securities information and providing services for its members;
(4) Formulating the rules that shall be observed by its members, organizing the vocational training for the practitioners of its member entities and carrying out vocational exchange between its members;
(5) Holding mediation over any dispute regarding securities operation between its members or between its members and clients;
(6) Organizing its members to make research on the development, operation and the relevant contents of the securities industry;
(7) Supervising and examining the acts of its members and, according to the relevant provisions, giving a disciplinary sanction to any member that violates any law or administrative regulation or the constitution of the association; and
(8) Performing any other function and duty as stipulated by the constitution of the industrial association.
Article 177 A council shall be established within the securities industrial association. The members of the council shall be selected through election according to the provisions of the constitution.
Chapter X Securities Regulatory Bodies
Article 178 The securities regulatory authority under the State Council shall carry out supervision and administration of the securities market according to law so as to preserve the order of the securities market and guarantee the legitimate operation thereof.
Article 179 The securities regulatory authority under the State Council shall perform the following functions and duties regarding the supervision and administration of the securities market:
(1) Formulating the relevant rules and regulations on the supervision and administration of the securities market and exercising the power of examination or verification according to law;
(2) Carrying out the supervision and administration of the issuance, listing, trading, registration, custody and settlement of securities according to law;
(3) Carrying out the supervision and administration of the securities activities of a securities issuer, listed company, stock exchange, securities company, securities registration and clearing institution, securities investment fund management company or securities trading service institution according to law;
(4) Formulating the standards for securities practice qualification and code of conduct and carrying out supervision and implementation according to law;
(5) Carrying out the supervision and examination of information disclosure regarding the issuance, listing and trading of securities;
(6) Offering guidance for and carrying out supervision of the activities of the securities industrial association according to law;
(7) Investigating into and punishing any violation of any law or administrative regulation on the supervision and administration of the securities market according to law; and
(8) Performing any other functions and duties as prescribed by any law or administrative regulation. The securities regulatory authority under the State council may establish a cooperative mechanism of supervision and administration in collaboration with the securities regulatory bodies of any other country or region and apply a trans-border supervision and administration.
Article 180 Where the securities regulatory authority under the State Council performs its duties and functions, it has the right to take the following measures:
(1) Carrying an on-the-spot examination of a securities issuer, listing company, securities company, securities investment fund management company, securities trading service company, stock exchange or securities registration and clearing institution;
(2) Making investigation and collecting evidence in a place where any suspected irregularity has happened;
(3) Consulting the parties concerned or any entity or individual relating to a case under investigation and requiring the relevant entity or person to give explanations on the matters relating to a case under investigation;
(4) Referring to and photocopying such materials as the registration of property right and the communication records relating to the case under investigation;
(5) Referring to and photocopying the securities trading records, transfer registration records, financial statements as well as any other relevant documents and materials of any entity or individual relating to a case under investigation; sealing up any document or material that may be transferred, concealed or damaged;
(6) Consulting the capital account, security account or bank account of any relevant party concerned in or any entity or individual relating to a case under investigation; in the case of any evidence certifying that any property as involved in a case such as illegal proceeds or securities has been or may be transferred or concealed or where any important evidence has been or may be concealed, forged or damaged, freezing or sealing up the foregoing properties or evidence upon the approval of the principal of the securities regulatory authority under the State Council;
(7) When investigating into any major securities irregularity such as manipulation of the securities market or insider trading, upon the approval of the principal of the securities regulatory authority under the State Council, restricting the securities transactions of the parties concerned in a case under investigation, whereby the restriction term may not exceed 15 trading days; under any complicated circumstance, the restriction term may be extended for another 15 trading day.
Article 181 Where the securities regulatory authority under the State Council performs its functions and duties of supervision or examination or investigation, the personnel in charge of supervision and examination or investigators shall be no less than 2 and shall show their legitimate certificates and the notice of supervision and examination as well as investigation. Where the personnel in charge of supervision and examination or investigation are less than 2 or fail to show their legitimate certificates and the notice of supervision and examination or investigation, an entity under examination and investigation has the right to refuse.
Article 182 The functionary of the securities regulatory authority under the State Council shall be duteous, impartial and clean, and handle matters according to law, and may not take advantage of his post to seek any unjust interests or divulge any commercial secrete of the relevant entity or individual as accessible in his performance.
Article 183 Where the securities regulatory authority under the State Council performs its functions and duties according to law, the entity or individual under examination and investigation shall coordinate with it, provide the relevant documents and materials in a faithful manner and may not refuse any legitimate requirement, obstruct the performance of duties and functions or conceal any document or material concerned.
Article 184 The regulations, rules as well as the working system of supervision and administration as formulated by the securities regulatory authority under the State Council according to law shall be publicized to the general public. The securities regulatory authority under the State Council shall, according to the results of investigation, decide the punishment on any securities irregularity, which shall be publicized to the general public.
Article 185 The securities regulatory authority under the State Council shall establish an information pooling mechanism of supervision and administration in collaboration with any other financial regulatory authority under the State Council. Where the securities regulatory authority under the State Council performs its functions and duties of supervision and examination or investigation according to law, the relevant departments shall coordinate with it.
Article 186 Where the securities regulatory authority under the State Council founds any securities irregularity as involved in a suspected crime when performing its functions and duties according to law, it shall transfer the case to the judicial organ for handling.
Article 187 The functionary of the securities regulatory authority under the State Council may not hold any post in an organization under its supervision.
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