The Chinese "SEC", or CSRC - China Securities Regulatory Commission

The dynamic economic development of China resulted in an unprecedented growth of the Chinese capital market. From a marginal market, China has become an important point on the stock exchange map of the world. Stock exchanges in Shenzen or Shanghai have become one of the most important places for trading financial instruments in Asia. The transformation of the capital market has forced supervisors to regulate the market more tightly. It was not always successful, as evidenced, for example, by the collapse of the Chinese stock market in 2015. In today's article we will present what is the "Chinese SEC", ie China Securities Regulatory Commission (CSRC).

History of the institution

The history of the organization dates back to 1992, but significant changes took place 6 years later. In December 1998 the first "modern" law regulating the capital market in China was passed. It entered into force in January 1999. The new regulations changed the competence of the Chinese regulator, which was to centralize and unify the regulations of the Chinese capital market. The CSRC dealt with the supervision of the capital market and tracked illegal activities on the market (e.g. manipulating the stock market or futures contracts). Following the introduction of the new law, CSRC has similar powers to the American counterpart - SEC.

Functions performed by CSRC

The China Securities Regulatory Commission is headquartered in Beijing. CSRC has many functions. These include:

•  Formulates market regulations and publishes the scope of good practices,
• It regulates the market of securities and derivative instruments (e.g. futures contracts),
• Supervises issues, quotations and trading on the stock market, convertible bonds, etc.,
• Supervision over the company's shareholders and control of whether they comply with market regulations,
• Supervision over trading in derivatives traded on a regulated market,
• Supervision over capital market institutions, including investment funds or rating agencies,
• Cooperation with government authorities to increase the transparency of the Chinese capital market,
• Punishing institutions, employees of investment companies and citizens who have broken the regulations of the capital market.

Higher management

The Management Board of the China Securities Regulatory Commission consists of a president, four vice-presidents and one inspector. 

Yi Huiman, source: Shanghai Daily

Yi Huiman - this is the president of the CSRC. He was born in 1964. He graduated in Statistics from Hangzhou Dianzi University. In the past, he worked, among others, as the president of the Industrial and Commercial Bank of China (ICBC). Yi Huiman is also a member of the Chinese Communist Party.

Fang Xianghai - this is one of the vice-presidents of CSRC. He graduated from Tsinghua University in 1986 and Stanford University in 1993. Between 1993 and 1998 he worked at the World Bank. In the years 1998 - 2001 he worked for, among others, China Construction Bank and China Galaxy Securities. Then he worked for fourteen years at the Shanghai Stock Exchange, where he was the CEO. He has been working in CSRC since 2015. Fang Xianghai is also a member of the Chinese Communist Party.

WangJianjun - this is another vice president of CSRC. He worked in the organization from 1997 to 2016. In 2016, he started working on the Shanghai Stock Exchange, where he was promoted to the position of president. With the changes made to the CSRC, he returned to work for a Chinese overseer. Like the rest of the senior staff, Wang is a member of the Chinese Communist Party.

Fan of Dazhi - works in CSRC as an inspector. In 1987 he graduated from the Dongbei University of Finance and Economics. Between 1999 and 2004, Fan Dazhi worked at the state-owned company Assets Management Co. For the next three years, he worked in director positions at Beijing Securities Co. Between 2007 and 2016, he worked at Hua Xia Bank, where he was later promoted to the position of the bank's president. He is a member of the Communist Party of China. 

Organizational structure of CSRC

The China Securities Regulatory Commission is divided into 20 departments. Such a division is to allow for more effective regulation of individual market segments. The CSRC includes:

• Department for supervision over the corporate bond market, 
• Department for supervision over the public offer market, 
• Derivatives Market Supervision Department,  
• Investor Protection Office,
• Department of supervision over funds and financial intermediaries,
• Internal Audit Department.

The CSRC also has regional branches to help better supervise individual areas of China. There are offices in both Beijing and Shanghai, as well as Inner Mongolia.

What institutions and organizations are supervised by CSRC

Due to its wide range of powers, CSRC supervises many participants of the Chinese capital market. The supervision covers, inter alia:

• Stock exchanges: Shanghai Stock Exchange, Shenzen Stock Exchange, Beijing Stock Exchange.
• Commodity exchanges and futures: Shanghai Futures Exchange, Zhengzhou Commodity Exchange, Dailan Commodity Exchange, China Financial Futures Exchange.
• Clearing companies: China Securities Depositary and Clearing Corporation Limited.
• Agencies and associations: incl. China Securities Investor Protection Fund Corporation, China Futures Market Monitoring Center Corporation Limited, Capital Market Statistics and Monitoring Center Corporation Limited and the Securities Association for Public Companies. 

CSRC now

For several years, supervision has been increasingly restricting the activities of capital market companies. This is because technology companies such as Tencent (via WeChat super-application) and Alibaba (via Ant Financial). The biggest example is the joint action of Chinese regulators, which stopped Ant's stock exchange debut two days before the planned IPO.