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On 31 December 2003, the Ministry of Finance announced amendments to the Regulations Governing Securities Firms, the Standards Governing the Establishment of Securities Firms, and the Regulations Governing Responsible Persons and Associated Persons of Securities Firms. The main points are as follows:
Regulations Governing Securities Firms
Securities firms are permitted to establish overseas branches.
New provisions are introduced imposing fi-nancial and operational restrictions and pro-hibitions on securities firms' own-account trading in overseas securities and on their hedging transactions in derivatives.
Structured products may be linked to overseas financial products, but only with the permis-sion of the Central Bank of China (CBC). But once permission has been granted individual transactions do not require CBC approval.
Standards Governing the Establishment of Se-curities Firms
In line with the change in the Regulations Governing Securities Firms to allow securities firms to establish overseas branches, the standards now provide that a securities firm may not apply to establish an overseas branch unless it has been trading for at least three years, and they restrict such establishment to locations announced by the Securities and Futures Commission (SFC) that have a cen-tralized securities exchange and a specialized regulatory agency.
To simplify the SFC's operations in issuing licenses to securities firms, and to reduce the frequency of reissuance of licenses, the stan-dards now provide that when a securities firm takes up a new subcategory of business it need not apply to the SFC for reissuance of its li-cense except in the case of amending its types of business.
Regulations Governing Responsible Persons and Associated Persons of Securities Firms
When conducting business at an overseas branch of a securities firm, the responsible officers and operational personnel of the overseas branch must comply with the local securities regulatory legislation. Except for the provisions governing registration and changes of registration, the re-mainder of the regulations' provisions do not apply to such overseas personnel.
