Since 2015, the Chinese government has been piloting the administrative reconciliation for security futures as part of its policy to protect stock market investors and has also provided a legal basis for its implementation to the regulations and other...
Since 2015, the Chinese government has been piloting the administrative reconciliation for security futures as part of its policy to protect stock market investors and has also provided a legal basis for its implementation to the regulations and other normative documents of China Securities Regulatory Commission (CSRC). Pursuant to the view that the relevant details and procedures should be prescribed by law to strengthen investor protection, Chinese government amended Securities Law of the People s Republic of China in December 2019 to incorporate the enforcement of Chinese administrative reconciliation system for securities as a law. In other words, this change from the applicable regulations to the method based on the government legislated law has enhanced the applicable stability and predictability of the enforcement of Chinese administrative reconciliation system for securities. Simultaneously, the amended Securities Law has greatly upgraded investor protection against losses by adding the administrative reconciliation for securities to previously available ex-ante prevention and ex-post punishment of existing stock market misconduct. The amended Securities Law prescribes general and principle of the administrative reconciliation system – only requirements and legal effects, and in order to implement that, it must be interpreted and applied in conjunction with the existing CSRC regulations and normative documents which elaborate the applicable administrative reconciliation system. However, existing regulations and normative documents hamper the effective implementation of the administrative reconciliation for securities because they strictly stipulate the scope and requirements of its application. In addition, the sections of the administrative reconciliation system in the amended Securities Law release several problems accrued from the lack of followings: securing the right of participation, sanctioning a breaching party, incoherence with former regulations and normative documents etc. In order not to let the administrative reconciliation system for securities stipulated in the amended Securities Law of the People s Republic of China as a nominal one, the current scope and requirements of its application should be relaxed by the regulations and other normative documents of CSRC; further, by enhancing uniformity and systematicity between the administrative reconciliation system for securities stipulated by the amended Securities Law of the People s Republic of China and the relevant regulations and normative documents, the enforcement of Chinese administrative reconciliation system for securities may act as a practical one and demonstrate its genuine purpose of investor protection.