First revision in four years! Securities industry self-discipline upgrade, advance compensation can "rebuild reputation"

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Interface News reporter | Chen Jing

Multiple sets of rules are reshaping the securities industry’s self-regulatory ecosystem.

On March 27, the China Securities Industry Association (hereinafter “CSIA”) officially released the revised “Administrative Measures for the Management of Information on Professional Reputation in the Securities Industry” (hereinafter “the Measures”), effective immediately from the date of publication. This is the first comprehensive revision of these Measures since they were formally launched and operated in 2022, nearly four years in—also an important move by the CSIA to implement regulatory directives, summarize industry practice, and further improve the mechanism for constraining professional reputation in the securities industry.

As we understand it, the revision of the Measures began with the dual needs of regulatory orientation and industry practice. As early as 2020, the “Opinions on Further Strengthening the Self-Regulatory Management Responsibilities of the China Securities Industry Association” clearly required the CSIA to build a market-oriented self-regulatory framework of constraints on conduct, ethics, integrity, and reputation. The implementation of the original version of the Measures in 2022 laid the institutional foundation for this, gradually establishing a self-regulatory system centered on the professional reputation information database, covering the entire process such as information collection, management, queries, and remediation.

This revision broadly solicited opinions from all parties, focusing on making provisions more precise, integrating processes more efficiently, and further refining regulatory details. On the premise that the original six-chapter overall framework and core regulatory logic were not changed, it completed optimization and breakthroughs in multiple key rules.

Compared with the original version, the most attention-grabbing change in the new version of the Measures lies in establishing a linkage mechanism between prior compensation and the management of professional reputation—opening up a “reputation repair” channel for securities firms to proactively assume responsibility for investor protection.

The core of this mechanism is that when an issuer causes losses to investors due to false statements or other illegal conduct, if the relevant securities firm voluntarily makes prior compensation to the harmed investors outside the civil compensation litigation procedures for infringement arising from false securities statements, and effectively alleviates or eliminates the illegal harm, it may apply to the CSIA. The relevant penalty information may be exempted from being recorded in the professional reputation information database.

The implementation of this rule aligns closely with the regulator’s strengthened orientation toward investor protection. In recent years, regulators have repeatedly emphasized the important role of prior compensation in resolving investor disputes. The newly amended Securities Law has already clarified the prior compensation制度. In typical false statement cases such as Kangmei Pharmaceutical, prior compensation by securities firms has become an important market-oriented approach to fulfilling the responsibilities of intermediary institutions.

On the day the Measures were released, at the Boao Asian Forum 2026 annual meeting, the Chief Lawyer Cheng Hehong of the China Securities Regulatory Commission also explicitly stated that it will increase the extent to which the prior compensation制度 is applied. Industry observers analyze that this will completely eliminate securities firms’ reputational concerns about proactively participating in prior compensation. It will both enhance securities firms’ willingness to compensate and speed up the efficiency of the realization of investor compensation, thereby effectively strengthening small and medium investors’ confidence in the market.

From the perspective of stricter regulation, the new version of the Measures further details the definition of illegal and dishonest information, explicitly including conduct that uses bribery to interfere with regulatory law enforcement within the scope of dishonesty.

Compared with the more general phrasing in the 2022 version—“interfering with regulatory law enforcement by improper means”—the new version clearly stipulates that interfering with the CSRC and its dispatched agencies’ regulatory law enforcement through improper means such as bribery, regardless of whether administrative penalties or disciplinary sanctions were imposed, as long as penalties or sanctions were given, or even if the circumstances are relatively minor and no penalty was imposed but it was determined by the discipline inspection and supervision authorities, the related information will be recorded in the professional reputation information database. This adjustment precisely implements the CSRC’s work deployment of “investigating both bribery and grant of bribes together,” further reinforcing securities firms’ sense of reverence for regulatory law enforcement and solidifying the industry’s line of defense for clean professional practice.

Optimizing the mechanism for collecting and submitting integrity information is another important aspect of this revision. To adapt to information confidentiality requirements for the integrity archive database in the securities and futures market, while also simplifying the information aggregation process, the new version of the Measures will uniformly integrate information originally obtained from the CSRC’s integrity archive database into the category of information that members submit on their own. The provisions that original information exchange was obtained through regulatory and self-regulatory organizations remain unchanged.

This adjustment streamlines the five categories of information sources in the 2022 version into four categories. At the same time, it clarifies members’ responsibility as the subject for reporting, requires them to establish a mechanism for reporting professional reputation information, and unifies the wording for reporting deadlines—report within 5 business days from the date of receipt and awareness of the relevant decision or from the date the decision is made; after review and verification by the CSIA, it will be recorded in the information database, avoiding misunderstandings that occur in practice.

Regarding violations in reporting, the new version of the Measures even establishes a three-level graded disciplinary and deterrence mechanism, greatly enhancing the operability of self-regulatory management. Specifically, if information is not reported or updated as required without proper reasons, the CSIA will issue a verbal reminder. If the issue is not rectified after the verbal reminder, a written reminder will be issued and the member may be required to submit a written explanation. If violations persist after the written reminder, depending on the severity of the circumstances, self-regulatory management measures or disciplinary sanctions will be imposed. Compared with the original version’s general provisions on deterrence, graded management can achieve more precise constraints and, from the source, solidify institutions’ internal management responsibilities.

In terms of the effectiveness and query management of professional reputation information, the new version of the Measures also provides clear and detailed rules. Among them, basic information of industry entities remains effective long term. Information such as administrative penalties and market bans made by the CSRC and its dispatched agencies has an effectiveness period consistent with the “Measures for the Integrity Supervision and Management of the Securities and Futures Market.” For self-regulatory management measures, disciplinary sanctions, and other positive and negative professional reputation information issued by the associations, the effectiveness period is uniformly set to 3 years; after the period expires, they will no longer be publicly disclosed or provided as query services (except where laws and regulations specify otherwise).

The information query process also sets strict access control to prevent information leakage and misuse. According to the provisions, members may directly query the reputation information of their own institution and its staff, and practitioners may query their own information. If they need to query information of other institutions or persons, they must submit an application form, identity documentation, a written consent document, and a confidentiality undertaking. Moreover, the purpose of the query is limited to activities related to the securities market. Query records are retained for 10 years from the date they are generated. Any unit or individual who uses or leaks the relevant information in violation of the rules will face self-regulatory deterrence; if there is suspicion of illegal conduct, the matter will be transferred to the regulatory authorities or judicial organs.

In addition, the new version of the Measures also clearly defines the specific categories of integrity information, dividing it into two major categories: commendation and rewards information, and illegal and dishonest information, and it details the specific scope of each category. Among them, commendation and rewards information includes commendation and rewards issued by provincial/ministerial-level or above units and national securities and futures industry organizations, as well as other circumstances recognized by the CSIA. Illegal and dishonest information covers multiple situations such as administrative penalties, market bans, disciplinary sanctions, criminal records, bribery used to interfere with regulatory oversight, and more—achieving comprehensive coverage of securities firms’ professional conduct.

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