Administrative Measures for Risk Control Indicators of Securities Companies (Revised in 2020)
Administrative Measures for Risk Control Indicators of Securities Companies (Revised in 2020)
Administrative Measures for Risk Control Indicators of Securities Companies (Revised in 2020)
Order of the China Securities Regulatory Commission No. 166
March 20, 2020
(Adopted upon deliberation at the 185th chairman meeting of the China Securities Regulatory Commission on July 5, 2006; revised in accordance with the Decision of the China Securities Regulatory Commission on the Revision of the Administrative Measures for Risk Control Indicators of Securities Companies on June 24, 2008, the Decision of the China Securities Regulatory Commission on the Revision of the Administrative Measures for Risk Control Indicators of Securities Companies on June 16, 2016, and the Decision the China Securities Regulatory Commission on Revising Some Securities and Futures Rules on March 20, 2020)
Chapter I General Provisions
Article 1 In order to establish a system for risk control indicators with net capital and liquidity as the core, strengthen risk control of securities companies, and prompt securities companies to strengthen their internal control, improve risk management level, and prevent risks, the Administrative Measures for Risk Control Indicators of Securities Companies (these "Measures") are formulated in accordance with the Securities Law of the People's Republic of China and other laws and administrative regulations.
Article 2 A securities company shall, in accordance with the related provisions of the China Securities Regulatory Commission (the "CSRC"), and in line with the principles of prudence and substance over form, calculate the risk control indicators such as net capital, risk coverage ratio, capital leverage ratio, liquidity coverage ratio, net steady fund rate, etc., prepare the Calculation Form for Net Capitals, Calculation Form for Risk Capital Reserves, Calculation Form for Total of On- and Off-balance-sheet, Calculation Form for Liquidity Coverage Ratio, Calculation Form for Net Steady Fund Rate, Calculation Form for Risk Control Indicators, and other regulatory statements (collectively, the "regulatory statements").
Article 3 The CSRC may, in light of market development and the principle of prudent supervision and regulation, make adjustments to the standards for the risk control indicators and criteria for the calculation thereof; before making adjustments, the CSRC shall seek industry-wide comments publicly and make transitional arrangements for the implementation of the adjustments.
For new products or new business for which no standards for the risk control indicators and criteria for the calculation thereof is required, before making an investment in such new products or engaging in such new business, a securities company shall, in accordance with the relevant provisions, report in advance to the CSRC or its dispatched offices at the place where it is registered (the "dispatched offices"), or report them for approval. The CSRC shall, in light of the characteristics and risk status of such new products or business and on the basis of industry-wide comments sought, determine the appropriate standards for the risk control indicators and criteria for the calculation thereof.
Article 4 The CSRC may, in line with the principle of classification-based supervision and in light of the governance structures, internal control level, and risk control status of securities companies, make appropriate adjustments to the standards for the risk control indicators and calculation requirements of securities companies of different categories and to the risk capital reserves calculation ratio of certain business.
Article 5 The CSRC and its dispatched offices shall, on a periodic or temporary basis, carry out inspections of the generation process of data on various risk control indicators of securities companies such as their net capital and of the genuineness, accuracy, and completeness of the results derived from such data.
The CSRC and its dispatched offices may, in light of the supervisory needs, require securities companies to engage an accounting firm in compliance with the Securities Law to audit their regulatory statements.
Article 6 A securities company shall, in accordance with the relevant provisions of the CSRC, establish a comprehensive risk management system in line with its own development strategies and include all its subsidiaries and sub-subsidiaries managed by reference to the subsidiaries into a comprehensive risk management system as well as strengthen its risk management over branches so as to cover all risks. The comprehensive risk management system shall include a feasible management system, perfect organization structure, reliable information technology system, quantitative risk index system, professional team, and effective risk-coping mechanisms.
A securities company shall appoint a senior officer having the relevant background, office-holding experience, and duty performance related to risk management as chief risk officer, and specify the same to be in charge of the overall risk management affairs.
Article 7 A securities company shall, on the basis of its own assets and liabilities and business development, establish a dynamic mechanism for supervising and complementing risk control indicators and complementing capital to ensure that various risk control indicators such as net capital meet the required standards at any time point.
A securities company shall, before commencing any business or distributing profits, conduct stress testing of risk control indicators and determine in a reasonable manner the maximum size of the relevant business or profits to be distributed.
A securities company shall establish a sound stress testing mechanism to carry out stress testing of the risk control indicators of the securities company in a timely manner in light of market changes and as required by the regulatory authorities.
Where stress testing results show that the risk exceeds the scope that a securities company can assume, the securities company shall take measures to control the size of the business or reduce risks.
Article 8 A securities company shall engage an accounting firm in compliance with the Securities Law to audit its annual regulatory statements.
Article 9 Any accounting firm engaged by a securities company and its certified public accountants shall act with due diligence and care, audit the genuineness, accuracy, and completeness of the regulatory statements, and express proper auditor opinions.
Chapter II Net Capital and its Calculation
Article 10 A securities company's net capital consists of core net capital and affiliated net capital.
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Order of the China Securities Regulatory Commission No. 166
March 20, 2020
(Adopted upon deliberation at the 185th chairman meeting of the China Securities Regulatory Commission on July 5, 2006; revised in accordance with the Decision of the China Securities Regulatory Commission on the Revision of the Administrative Measures for Risk Control Indicators of Securities Companies on June 24, 2008, the Decision of the China Securities Regulatory Commission on the Revision of the Administrative Measures for Risk Control Indicators of Securities Companies on June 16, 2016, and the Decision the China Securities Regulatory Commission on Revising Some Securities and Futures Rules on March 20, 2020)
Chapter I General Provisions
Article 1 In order to establish a system for risk control indicators with net capital and liquidity as the core, strengthen risk control of securities companies, and prompt securities companies to strengthen their internal control, improve risk management level, and prevent risks, the Administrative Measures for Risk Control Indicators of Securities Companies (these "Measures") are formulated in accordance with the Securities Law of the People's Republic of China and other laws and administrative regulations.
Article 2 A securities company shall, in accordance with the related provisions of the China Securities Regulatory Commission (the "CSRC"), and in line with the principles of prudence and substance over form, calculate the risk control indicators such as net capital, risk coverage ratio, capital leverage ratio, liquidity coverage ratio, net steady fund rate, etc., prepare the Calculation Form for Net Capitals, Calculation Form for Risk Capital Reserves, Calculation Form for Total of On- and Off-balance-sheet, Calculation Form for Liquidity Coverage Ratio, Calculation Form for Net Steady Fund Rate, Calculation Form for Risk Control Indicators, and other regulatory statements (collectively, the "regulatory statements").
Article 3 The CSRC may, in light of market development and the principle of prudent supervision and regulation, make adjustments to the standards for the risk control indicators and criteria for the calculation thereof; before making adjustments, the CSRC shall seek industry-wide comments publicly and make transitional arrangements for the implementation of the adjustments.
For new products or new business for which no standards for the risk control indicators and criteria for the calculation thereof is required, before making an investment in such new products or engaging in such new business, a securities company shall, in accordance with the relevant provisions, report in advance to the CSRC or its dispatched offices at the place where it is registered (the "dispatched offices"), or report them for approval. The CSRC shall, in light of the characteristics and risk status of such new products or business and on the basis of industry-wide comments sought, determine the appropriate standards for the risk control indicators and criteria for the calculation thereof.
Article 4 The CSRC may, in line with the principle of classification-based supervision and in light of the governance structures, internal control level, and risk control status of securities companies, make appropriate adjustments to the standards for the risk control indicators and calculation requirements of securities companies of different categories and to the risk capital reserves calculation ratio of certain business.
Article 5 The CSRC and its dispatched offices shall, on a periodic or temporary basis, carry out inspections of the generation process of data on various risk control indicators of securities companies such as their net capital and of the genuineness, accuracy, and completeness of the results derived from such data.
The CSRC and its dispatched offices may, in light of the supervisory needs, require securities companies to engage an accounting firm in compliance with the Securities Law to audit their regulatory statements.
Article 6 A securities company shall, in accordance with the relevant provisions of the CSRC, establish a comprehensive risk management system in line with its own development strategies and include all its subsidiaries and sub-subsidiaries managed by reference to the subsidiaries into a comprehensive risk management system as well as strengthen its risk management over branches so as to cover all risks. The comprehensive risk management system shall include a feasible management system, perfect organization structure, reliable information technology system, quantitative risk index system, professional team, and effective risk-coping mechanisms.
A securities company shall appoint a senior officer having the relevant background, office-holding experience, and duty performance related to risk management as chief risk officer, and specify the same to be in charge of the overall risk management affairs.
Article 7 A securities company shall, on the basis of its own assets and liabilities and business development, establish a dynamic mechanism for supervising and complementing risk control indicators and complementing capital to ensure that various risk control indicators such as net capital meet the required standards at any time point.
A securities company shall, before commencing any business or distributing profits, conduct stress testing of risk control indicators and determine in a reasonable manner the maximum size of the relevant business or profits to be distributed.
A securities company shall establish a sound stress testing mechanism to carry out stress testing of the risk control indicators of the securities company in a timely manner in light of market changes and as required by the regulatory authorities.
Where stress testing results show that the risk exceeds the scope that a securities company can assume, the securities company shall take measures to control the size of the business or reduce risks.
Article 8 A securities company shall engage an accounting firm in compliance with the Securities Law to audit its annual regulatory statements.
Article 9 Any accounting firm engaged by a securities company and its certified public accountants shall act with due diligence and care, audit the genuineness, accuracy, and completeness of the regulatory statements, and express proper auditor opinions.
Chapter II Net Capital and its Calculation
Article 10 A securities company's net capital consists of core net capital and affiliated net capital.
......