On November 29, the China Securities Regulatory Commission separately issued the “Regulations on the Implementation of the System of Commitments for the Parties in the Administrative Enforcement of Securities and Futures (Draft for Comment)” (hereinafter referred to as the “Regulations”) and the “Administrative Measures for the Commitment Funds for the Parties in Administrative Enforcement of Securities and Futures (Draft for Comments)” ( Hereinafter referred to as the “Commitment Fund Measures”) to solicit opinions from the public, and the deadline for feedback is December 13, 2021.
The China Securities Regulatory Commission stated that the drafting of the “Regulations” adhered to the following principles: First, give full play to the characteristics of the system. Give full play to the characteristics of the party’s commitment system in administrative law enforcement, timely compensate investors for losses, and enhance the sense of acquisition and satisfaction of the investor community. The second is to proceed steadily and prudently. As for the commitment of the parties to administrative law enforcement, this new method of law enforcement is generally still advancing in accordance with the principle of steady and prudence. On the basis of abiding by the provisions of the higher-level laws, earnestly summarize practical experience, strictly limit the scope of application, refine and improve the handling procedures, and ensure the smooth implementation of the new system. The third is to strengthen supervision and control. Establish a strict internal and external supervision and control system, and clarify the division of responsibilities between the parties’ commitment to handle investigations, punishments, insurance, and dispatch agencies to prevent moral hazards and conflicts of interest.
The “Regulations” consist of 23 articles. Based on the “Securities Law” and the “Measures for the Implementation of the Party Commitment System for Administrative Enforcement of Securities and Futures (Draft)”, it mainly specifies applicable conditions, handling procedures, and management and use of commitment funds. The main content includes the following aspects: one is to strictly limit the scope of application; the other is to clarify the coordination and connection mechanism between the commitment handling department and the investigation and trial department; the third is to make it clear that the commitment handling department and the commitment fund measurement department will coordinate and cooperate; It is to stipulate the arrangement of investor compensation mechanism; the fifth is to clarify the role of the dispatched agency in the commitment of the parties in administrative law enforcement; the sixth is to strengthen supervision and control and strictly prevent moral hazards.
Regarding the “Commitment Fund Measures”, the CSRC stated that the “Commitment Fund Measures” formed by this revision generally followed the “Interim Measures for the Administration of Administrative Settlement Funds” promulgated in 2015, and were revised and improved in accordance with the upper law and practical needs. The main amendments are The contents are as follows: First, according to the expression in Article 171 of the Securities Law, the original expression of “commitment fund” was adjusted to “commitment fund”, and the relevant definition clauses were deleted. The second is to improve the management method of the commitment fund based on the specific circumstances that have emerged in practice. The third is to strengthen investor protection, encourage parties to actively compensate investors, and reserve institutional space for parties to pay investors on their own. The promulgation of the “Commitment Fund Measures” will provide a solid guarantee for strengthening investor protection and enabling injured investors to obtain benefits and compensation. It is conducive to improving the efficiency of supervision and stabilizing the market order.
In the next step, the China Securities Regulatory Commission will further revise and improve the “Regulations” and “Commitment Fund Measures” based on the public comments.
Our reporter Xing Meng
(Editor in charge: Jiang Ninglu)