Market infrastructure - China
Institutions and organisation
The Shanghai Stock Exchange (www.sse.com.cn)
The Shanghai Stock Exchange (SSE) was founded on 26 November 1990 and started operations on 19 December 1990. The SSE is governed directly by the China Securities Regulatory Commission (CSRC). The tasks of the SSE are to provide the marketplace with facilities for securities trading including:
- Formulating business rules;
- Accepting and arranging listings;
- Organising and monitoring securities trading;
- Regulating members and listed companies;
- Managing and disseminating market information.
The Shenzhen Stock Exchange (www.szse.cn)
The Shenzhen Stock Exchange is a mutualised organisation founded on 1 December 1990 wholly state-owned and is governed by the China Securities Regulatory Commission (CSRC). The Shenzhen Stock Exchange strives to create a fair, open and orderly market to meet diversified financing needs. In compliance with the Stock Exchange Administration Act, it is responsible for providing the marketplace with facilities for securities trading including:
- Formulating business rules;
- Accepting and arranging listings;
- Monitoring of trading;
- Ensuring the continuous listing, compliance and the supervision of exchange members.
China Securities Depository and Clearing Corp. Ltd. (CSDCC) (www.chinaclear.cn)
CSDCC is a non-profit organisation established on 30 March 2001 through the merger of the Shanghai Securities Central Clearing and Registration Corporation (founded in 1993) and the Shenzhen Central Clearing Co. Ltd. (founded in 1995). The two former securities clearing companies have been integrated with branches affiliated to the Shanghai and Shenzhen stock exchanges respectively.
CSDCC is funded by both stock exchanges, the headquarter is located in Beijing and reports to and is supervised directly by the China Securities Regulatory Commission. It has the following departments:
- Overall administration;
- Registration;
- Settlement;
- Business development;
- Technical development;
- Financial development.
CSDCC is the Central Securities Depository (CSD) and acts as clearing house and registrar for equities including A and B-shares, funds, closed-end investment funds, government and corporate bonds, ETF, LOF and warrants. It operates a book-entry settlement system with the underlying securities dematerialised.
CSDCC acts as the Central Counterparty (CCP) and guarantees securities and cash settlement. Investors’ assets are held on a segregated basis at the branches. Use of CSDCC by brokers and custodian banks is mandatory. Brokers and custodian banks are eligible to become clearing participants.
China Central Depository & Clearing Co., Ltd (CCDC) (www.chinabond.com.cn)
CCDC is the first central securities depository (CSD) approved by the State Council in China. It is a state-owned financial institution. Since its establishment, CCDC started from the centralised depository of treasury bonds and gradually developed into a CSD for many kinds of financial assets. CCDC is the only treasury bond depository assigned by the Ministry of Finance, presiding the establishment and operation of treasury bond depository system. CCDC is granted as the CSD in the China Interbank Bond Market (CIBM) as well as the primary custodian for commercial bank book-entry treasure bond transaction. CCDC is responsible for the development and operation of Trust Registration System, Wealth Management Registration System, and Credit Asset Registration and Exchange System.
Shanghai Clearing House (SHCH) (www.shclearing.com)
SHCH was authorised by the PBOC to one of the central securities depositories in China and has developed a national center of registration, custody and settlement for corporate credit bonds and servicing innovative financial products. The main business of SHCH covers bond, foreign exchange and financial derivatives.
SHCH is a Qualified Central Counterparty (QCCP) accepted by the PBOC and has established a CCP clearing system in China’s OTC financial market, including CCP clearing for bonds, interest rates derivatives, foreign exchange, exchange rate derivatives and commodity derivatives.
China Foreign Exchange Trading System (CFETS) (www.chinamoney.com.cn)
The China Foreign Exchange Trade System (CFETS), founded on April 18, 1994, is a sub-institution of the People's Bank of China. The CFETS' main functions are:
- Providing systems for FX trading, RMB lending, bond trading, and exchange rate and interest rate derivatives trading;
- Organising FX trading, RMB lending, bond trading, and exchange rate and interest rate derivatives trading;
- Providing clearing, information, risk management, and surveillance services on interbank markets; and
- Engaging in other businesses authorised by thePBOC.
The People’s Bank of China (PBC) (www.pbc.gov.cn)
PBC was established on 1 December 1948. In September 1983, the State Council decided that the PBC would function as a central bank. Under the guidance of the State Council, the PBC formulates and implements monetary policy, prevents and resolves financial risks, and safeguards financial stability.
Regulatory structure
Central Bank - The People’s Bank of China
The People’s Bank of China, as the central bank, is responsible for:
- Drafting and enforcing relevant laws, rules and regulations that are related to fulfilling its functions;
- Formulating and implementing monetary policy in accordance with law;
- Issuing the Renminbi and administering its circulation;
- Regulating financial markets, including the inter-bank lending market, the inter-bank bond market, foreign exchange market and gold market;
- Preventing and mitigating systemic financial risks to safeguard financial stability;
- Maintaining the Renminbi exchange rate at adaptive and equilibrium level;
- Holding and managing the state foreign exchange and gold reserves;
- Managing the State treasury as fiscal agent;
- Making payment and settlement rules in collaboration with relevant departments and ensuring normal operation of the payment and settlement systems;
- Providing guidance to anti-money laundering work in the financial sector and monitoring money laundering related suspicious fund movement;
- Developing statistics system for the financial industry and responsible for the consolidation of financial statistics as well as the conduct of economic analysis and forecast;
- Administering credit reporting industry in China and promoting the building up of credit information system;
- Participating in international financial activities at the capacity of the central bank;
- Engaging in financial business operations in line with relevant rules;
- Performing other functions prescribed by the State Council.
The State Administration of Foreign Exchange (SAFE) (www.safe.gov.cn)
SAFE is the regulatory body that supervises all foreign currency matters in China.
Some of SAFE’s responsibilities are to:
- Study and propose policy suggestions on the reform of the foreign exchange administration system, prevention of the balance of payments risks, and promotion of the balance of payments equilibrium; study and implement policy measures for the gradual advancement of the convertibility of the RMB under the capital account and the cultivation and development of the foreign exchange market; to provide suggestions and a foundation for the People's Bank of China to formulate policy on RMB exchange rate.
- Participate in the drafting of relevant laws, regulations, and departmental rules on foreign exchange administration, releasing standard documents related to the carrying out of responsibilities.
- Oversee the statistics and monitoring of the balance of payments and the external credit and debt, releasing relevant information according to regulations and undertaking related work concerning the monitoring of cross-border capital flows.
- Be responsible for the supervision and management of the foreign exchange market of the state; to undertake supervision and management of the settlement and sale of foreign exchange; to cultivate and develop the foreign exchange market.
- Be responsible for supervising and checking the authenticity and legality of the receipt and payment of foreign exchange under the current account according to law; to be responsible for implementing foreign exchange administration under the capital account according to law, and to continuously improve management work in line with the convertibility process of the RMB under the capital account; and to regulate management of overseas and domestic foreign exchange accounts.
- Be in charge of implementing supervision and checking of foreign exchange according to law, and punishing behaviours that violate the foreign exchange administration.
- To undertake operations and management of foreign exchange reserves, gold reserves, and other foreign exchange assets of the state.
- Arrange development planning, standards, and criteria for IT-based foreign exchange administration and organizing relevant implementation; to realize supervision of information-sharing with the relevant administrative departments according to law.
- Take part in relevant international financial activities.
- Undertake other matters as assigned by the State Council and the People's Bank of China.
National Association of Financial Market Institutional Investors (NAFMII) (www.nafmii.org.cn)
In September 2007, NAFMII was officially established as the entity mainly responsible for the self-regulatory management of the OTC market. With the tenets of “self-regulation, innovation and service”, NAFMII is conducting self-regulation over the CIBM under the supervision and guidance of the PBOC. Experience in most recent years proves that NAFMII plays an important role in facilitating market expansion, and in guiding and regulating both the primary and secondary markets.
China Securities Regulatory Commission (CSRC) (www.csrc.gov.cn)
The CSRC is the direct regulator for securities markets and stock exchanges in mainland China. As an independent regulator, the CSRC is responsible for:
- Enacting and examining all securities-related laws, rules and regulations;
- Approving new listings and corporate actions;
- Safeguarding the interests of investors in China by mitigating any illegal, dishonourable or improper conduct in relation to securities trading.
The CSRC maintains offices in Shanghai and Shenzhen to:
- Coordinate and regulate the operations of the Shanghai and Shenzhen stock exchanges;
- Implement market rules and regulations;
- Investigate any irregularities identified.
China Banking and Insurance Regulatory Commission (CBIRC) (www.cbrc.gov.cn)
CBIRC which was merged by China Banking Regulatory Commission (CBRC) and China Insurance Regulatory Commission (CIRC) was formally established in April 2018. The new commission conducts enhanced oversight of both banking and insurance industries by combining responsibilities of supervising the banking and insurance industries, preventing and dissolving financial risks, and protecting financial product consumers’ rights.
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1. The official ISO 4217 abbreviation of China's currency is CNY (Chinese Yuan), but it is also abbreviated as RMB (Renminbi).