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Article

TieCheng Yang, Yang Chen, Scarlett Zhang, Virginia Qiao, Zhenyu Wang and Shuozhu Zheng

To introduce the Securities Law of the People's Republic of China (the “Securities Law 2019”) revised on 28 December 2019, and provide a detailed analysis on its key…

Abstract

Purpose

To introduce the Securities Law of the People's Republic of China (the “Securities Law 2019”) revised on 28 December 2019, and provide a detailed analysis on its key implications to the securities regulatory regime and market activities, especially securities issuance and trading activities in China.

Design/methodology/approach

This article starts from a historical overview of the Securities Law and its several revisions and amendments, highlights the notable core revisions in the Securities Law 2019, analyzes the key legal and regulatory impacts to the securities-related activities and market players, and finally, provides an outlook to the future developments of securities regulatory regime in conformity with the Securities Law 2019.

Findings

This article concludes that the revisions made to the Securities Law 2019 cover a broad range of issues including the issuance and trading of securities, acquisition of a listed company, information disclosure, securities registration and settlement, etc. Such revisions to the Securities Law will lead to far-reaching and profound implications on the securities regulatory system and industry practice in China.

Practical implications

The Securities Law 2019 attracts broad attention from securities market players as well as relevant professionals of the industry, including securities lawyers. As this is a novel and hot topic within the industry, it is important for securities lawyers to keep on track.

Originality/value

High-level guidance from experienced lawyers in the Capital Markets and Financial Regulation practices.

Details

Journal of Investment Compliance, vol. 22 no. 1
Type: Research Article
ISSN: 1528-5812

Keywords

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Article

TieCheng Yang and Lucas Wang

The aim of this paper is to explain the details of a trial program in China to introduce margin trading and securities lending.

Abstract

Purpose

The aim of this paper is to explain the details of a trial program in China to introduce margin trading and securities lending.

Design/methodology/approach

The paper describes eligibility requirements for securities companies and their clients; accounts for margin trading and securities lending to be opened by the securities company; contracts between a securities company and its client that must be entered into; collateral a client is required to provide to the securities company; a client's rights and entitlement with respect to collateral; internal rules and precautions required of the securities company; the securities company's risk control requirements; and the possible impact of the new program on foreign investors.

Findings

The paper finds that the conduct of margin trading and securities lending in China is highly regulated. There are significant requirements with respect to separate accounts, collateral, contracts, and controls. Before providing margin trading or securities lending to clients, securities companies are required to carefully assess and determine the identity, creditworthiness, assets, income, securities investment experience, investment preferences, and risk appetite of their clients. The securities company must explain how the margin trading and securities lending will be conducted and the content of the contracts to the client, and require the client to sign a transaction risk disclosure letter that specifies certain risks involved in such business. A client may only maintain margin trading facilities and securities lending business with one securities company in China.

Originality/value

The paper provides a practical guide to a new program by lawyers who are experts in Chinese securities regulations.

Details

Journal of Investment Compliance, vol. 8 no. 3
Type: Research Article
ISSN: 1528-5812

Keywords

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Article

Paget Dare Bryan, Yang TieCheng and Patrick Phua

The purpose of this paper is to discuss the trial implementation of stock index futures trading, margin trading and securities lending in China – approved in principle by…

Abstract

Purpose

The purpose of this paper is to discuss the trial implementation of stock index futures trading, margin trading and securities lending in China – approved in principle by the State Council and confirmed by the China Securities Regulatory Commission (CSRC) on January 8, 2010.

Design/methodology/approach

The paper describes various preliminary rules and regulations for stock index futures trading, margin trading, and securities lending that have been issued starting in 2006 and the latest regulatory developments, requirements and timing related to the trial implementation.

Findings

The stringent requirements imposed by CSRC highlights its cautious approach to the trial process for margin trading and securities lending. By defining “securities lending” as the borrowing of securities and the subsequent sale of those securities in the 2006 Trial Administrative Measures, the regulator appears to leave open the possibility of short selling.

Practical implications

The Announcement has been warmly welcomed by market participants because index futures trading, margin trading and securities lending are expected to significantly add to the Chinese equity market's liquidity and price discovery process in the long run.

Originality/value

The paper provides practical guidance from experienced securities lawyers.

Details

Journal of Investment Compliance, vol. 11 no. 2
Type: Research Article
ISSN: 1528-5812

Keywords

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Article

Connie Heng, Cao Yanping, Rupert Li and Yang TieCheng

The purpose of this paper is to explain the legal framework of both Hong Kong and the People's Republic of China (PRC) that governs the issuance of Renminbi bonds in Hong Kong.

Abstract

Purpose

The purpose of this paper is to explain the legal framework of both Hong Kong and the People's Republic of China (PRC) that governs the issuance of Renminbi bonds in Hong Kong.

Design/methodology/approach

The paper explains the background; outlines key requirements under PRC laws, including eligibility requirements, application procedures in China, timing and reporting, and remittance and payment procedures; and looks at key issues arising from the regulatory regime of Hong Kong.

Findings

The paper finds that, given the relatively low interest rate for Renminbi deposits in Hong Kong, Hong Kong, investors have generally welcome the inaugural issues of Renminbi bonds by the China Development Bank and the Export‐Import Bank of China.

Originality/value

The paper provides practical guidance from experienced Hong Kong and China securities lawyers.

Details

Journal of Investment Compliance, vol. 8 no. 4
Type: Research Article
ISSN: 1528-5812

Keywords

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Article

TieCheng Yang and Nan Zhang

The aim of this paper is to outline some key features of China's new rules on anti‐money laundering.

Abstract

Purpose

The aim of this paper is to outline some key features of China's new rules on anti‐money laundering.

Design/methodology/approach

This paper describes the expanded definition of “anti‐money laundering”; the application of the rules to a broader group of financial institutions; the three required anti‐money laundering systems (client identity recognition, retention of client identity documents and trading records, and reporting of large‐sum transactions and suspicious transactions); the expected manner of anti‐money laundering investigations by the People's Bank of China; liabilities for breach; and anti‐money laundering regulations in the insurance and securities sectors.

Findings

The paper finds that new anti‐money laundering rules expand the definition of “anti‐money laundering” broaden the scope of institutions to which anti‐money laundering regulations apply, and establish more stringent requirements for the three key internal anti‐money laundering systems that financial institutions and certain non‐financial institutions must have: client identity recognition, retention of client identity documents and trading records, and reporting of large‐sum transactions and suspicious transactions. Compared to the old rules, the new anti‐money laundering rules impose more serious punishment on violations.

Originality/value

The paper provides a detailed and readable reference on the new Chinese anti‐money laundering regulations for those working in the China market and those who wish to compare these Chinese regulations with similar ones in other countries.

Details

Journal of Investment Compliance, vol. 8 no. 2
Type: Research Article
ISSN: 1528-5812

Keywords

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Article

Henry A. Davis

Abstract

Details

Journal of Investment Compliance, vol. 11 no. 2
Type: Research Article
ISSN: 1528-5812

Content available
Article

Henry A. Davis

Abstract

Details

Journal of Investment Compliance, vol. 8 no. 2
Type: Research Article
ISSN: 1528-5812

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Abstract

Details

Journal of Investment Compliance, vol. 8 no. 4
Type: Research Article
ISSN: 1528-5812

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Article

Henry A. Davis

Abstract

Details

Journal of Investment Compliance, vol. 8 no. 3
Type: Research Article
ISSN: 1528-5812

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Article

Saqib Sharif, Hamish D. Anderson and Ben R. Marshall

The purpose of this paper is to investigate how the announcement and implementation of short sales and margin trading regulation affects Chinese stock returns and trading…

Abstract

Purpose

The purpose of this paper is to investigate how the announcement and implementation of short sales and margin trading regulation affects Chinese stock returns and trading volume. On 31 March 2010, the Chinese regulators launched a pilot programme, allowing short sales and margin trading for 50 Shanghai Stock Exchange and 40 Shenzhen Stock Exchange stocks.

Design/methodology/approach

This paper uses an event study approach to compare market model abnormal returns (ARs) of the pilot firms with two distinct matched firm samples. A volume event study is also conducted to examine abnormal trading activity surrounding the key events in the pilot stocks.

Findings

Negative ARs follow both the announcement and implementation of short selling and margin trading. This suggests the negative impact of short sales dominates the positive impact of margin trading on an average. Volume also declines, which is consistent with uninformed investors’ seeking to avoid trading against informed traders.

Originality/value

The paper appears to be the first to address the impact of both the announcement and implementation of short selling and margin trading rule changes on returns and liquidity using individual stock data.

Details

International Journal of Managerial Finance, vol. 10 no. 3
Type: Research Article
ISSN: 1743-9132

Keywords

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