Comments on Draft Administrative Measures for Foreign-Invested Securities

On behalf of the more than 200 members of the US-China Business Council (USCBC), we appreciate the opportunity to provide comments to the China Securities Regulatory Commission (CSRC) on the Draft Administrative Measures for... Read more
On behalf of the more than 200 members of the US-China Business Council (USCBC), we appreciate the opportunity to provide comments to the China Securities Regulatory Commission (CSRC) on the Draft Administrative Measures for Foreign-Invested Securities Companies (the draft measures). We hope additional steps will be taken to ensure consultation with industry stakeholders on these comments before a final version of the measures is released. Read less
Washington, DC ( Global)
April 28, 2018
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uschinabusinesscouncil

April 28, 2018

Article 7 currently states that the “cumulative investment shall not exceed China’s commitment for opening the securities industry,” but including the specific ownership limits and time frame for further liberalizations in the rules themselves would provide greater clarity and certainty as to what the rules mean and how they... Read more

April 28, 2018

Article 7 currently states that the “cumulative investment shall not exceed China’s commitment for opening the securities industry,” but including the specific ownership limits and time frame for further liberalizations in the rules themselves would provide greater clarity and certainty as to what the rules mean and how they will be applied.

In Article 4, USCBC recommends removing restrictions on the number of foreign senior management personnel for a foreign majority-controlled joint venture. Removing existing restrictions would facilitate the utilization of foreign knowledge and expertise in China’s securities market, and would reflect the Chinese government’s commitment to increase foreign ownership in Chinese securities companies to 51 percent and removing foreign ownership restrictions within three years.  

We encourage CSRC to explicitly allow both new and existing securities joint ventures to apply for four business licenses simultaneously, rather than being restricted to applying for two licenses in any six month period. We encourage CSRC to accord flexibility to existing securities joint ventures so that they are not subject to an industry median ranking requirement or similar condition. Securities joint ventures with a track record of commitment to China should receive equal if not better treatment than new securities joint ventures.

We recommend that a better basis for reviewing a foreign investor’s qualification would be for CSRC to require a foreign shareholder to provide a statement on its current general regulatory status or a no-objection letter from its home regulator. This would better align with existing rules in other parts of China’s financial sector. The China Banking and Insurance Regulatory Commission (CBIRC), for instance, only requires that foreign applicants provide a photocopy of their business license of financial business permit issued by the financial regulatory authority of the country where a foreign shareholder of the bank to be formed is located, along with a written opinion from the authority.

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