□ Reported by reporter Gao Xin in Beijing
Recently, for the over-the-counter options business, the China Securities Regulatory Commission issued three consecutive fines, involving three leading brokerages, namely CICC, Huatai Securities and China Securities.
After investigation, the China Securities Regulatory Commission found that the index-linked subject of an OTC option contract of CITIC Construction Investment Securities exceeded the specified scope, violating Article 17 of the "Administrative Measures for the OTC Option Business of Securities Companies".Article 17 of the relevant provisions stipulates that "the scope of individual stocks that securities companies carry out OTC options business shall not exceed the current list of margin financing and securities lending targets, and the scope of stock index targets shall not exceed the scope stipulated by the Securities Industry Association".
The China Securities Regulatory Commission believes that the above-mentioned problems reflect that CSC's compliance management is not in place.In accordance with the provisions of Articles 3 and 32 of the "Measures for the Compliance Management of Securities Companies and Securities Investment Fund Management Companies", it is decided to take administrative supervision and management measures of issuing a warning letter to China Securities Co., Ltd.
Huatai Securities’ over-the-counter options business also received a fine.After investigation, the China Securities Regulatory Commission found that Huatai Securities had the following problems: First, some of the over-the-counter option contracts linked to individual stocks exceeded the scope of current margin financing and securities lending, violating Article 17 of the "Administrative Measures for the Over-the-Counter Option Business of Securities Companies"; Failure to issue written compliance opinions for some OTC option contracts with a term of less than 30 days, which violated Article 20 of the "Administrative Measures for the OTC Options Business of Securities Companies"; The internal process is not standardized, and the access management of derivatives is not carried out as required.
In addition, the CSRC also found that the counterparty to one of CICC's OTC options contracts was a non-professional institutional investor, violating Article 24 of the "Administrative Measures for Securities Companies' OTC Option Business".
The CSRC believes that the above-mentioned problems reflect that CICC's compliance management is not in place.In accordance with the provisions of Articles 3 and 32 of the Measures for the Compliance Management of Securities Companies and Securities Investment Fund Management Companies, it is decided to take administrative supervision and management measures of issuing a warning letter to CICC.
Over-the-counter options business refers to options transactions carried out over the counters of securities companies.The supervision implements hierarchical management of securities firms' participation in OTC options trading, and divides them into primary dealers and secondary dealers according to each company's capital strength, classification results, overall risk management level, professionals and technical systems.
It is understood that the CICC, Huatai Securities and China Securities that were punished this time are all primary dealers in over-the-counter options.According to the regulations, primary dealers can open a special account for hedging transactions of individual stocks on the Shanghai and Shenzhen Stock Exchanges and directly carry out hedging transactions; secondary dealers can only conduct hedging transactions of individual stocks on the floor with primary dealers, and cannot do so on their own or with a single dealer. Counterparties other than senior dealers carry out on-exchange individual stock hedging transactions.
(Editor in charge: Guan Jing)
