CSRC Drafts Rules on Third-party Platforms Use by Securities Firms
Source: Regulation Asia Lucy Zhang, Regulation Asia
The rules require brokerage firms to guarantee technical and data security when using third-party platforms to conduct securities business activities.
The CSRC (China Securities Regulatory Commission) has issued draft rules on the use of third-party online platforms by securities firms to conduct securities business activities such as brokerage and investment advisory.
According to the CSRC, amid an increase in the use of third-party platforms in recent years, some securities firms have ignored the potential risks in the interest of rapidly increasing the number of actively trading customers.
In particular, the CSRC is concerned with lax compliance and information security standards, which it says facilitate illegal activities and directly affect securities market stability.
The new rules are aimed at guiding orderly innovation in the securities industry, clarifying the boundaries of cooperation between securities firms and third-party institutions, and establishing a mechanism to prevent risks, the CSRC says.
The rules clarify that third-party institutions are limited to providing information technology related services and may not interfere in investor solicitation or in any other aspect of securities business activities such as receiving trading instructions.
The rules also require securities firms to guarantee technical security and ensure client data is protected from being accessed or stored by third-party institutions.
Under the rules, third-party platform may also be subject to CSRC inspections.
The consultation, is open for comment until 15 September.
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