China’s securities regulator and its industry body are moving to close compensation loopholes for brokerage management and staff, extending anti-corruption oversight to overseas operations for the first time, as Beijing pushes the sector to build world-class investment banks.
The Securities Association of China, a self-regulatory body under the supervision of the regulator, recently sent brokerages a revised draft of its rules on “clean practices”, seeking industry feedback by September 29, domestic media reported on Monday, citing industry sources.
Under the proposed rules, offshore operations have been explicitly targeted for integrity oversight, marking a major expansion of Beijing’s regulatory reach into financial institutions’ overseas activities – a sector long viewed as a grey zone vulnerable to illicit transfers and kickbacks.
Brokerages will be required to establish clawback mechanisms to recover bonuses and performance pay from employees who violate ethical standards or regulatory rules. Brokerages must also prepare an annual report on integrity management and have it reviewed by their board.