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China Banking Regulatory Commission
Detailed Rules of Implementation of Measures for the Administration of Pilot Currency Brokerage Companies Chapter I General Provisions
Chapter II Establishment of Institutions
Chapter III Administration of the Qualification for Assuming the Post of Director or Senior Manager
Chapter IV Risk Control and Supervision and Administration
Chapter V Supplementary Provisions
Chapter I General Provisions
Article 1
The present Detailed Rules are formulated according to Measures for the Administration of Pilot Currency Brokerage Companies t (hereinafter
referred to as the Measures) and the relevant provisions.
Article 2
China Banking Regulatory Commission (hereinafter referred to as the CBRC) and the dispatched offices thereof shall carry out supervision
and administration to currency brokerage companies according to the Measures and the present Detailed Rules.
Chapter II Establishment of Institutions
Article 3
An applicant who meets the requirements of Article 7 or 8 of the Measures and holds the largest proportion of shares in a currency
brokerage company that will be established shall submit the materials as prescribed in Article 13 of the Measures to the banking
regulatory bureau (an office as dispatched by the CBRC at the provincial level) where the currency brokerage company will be located
. A non- preserving legal opinion that have no conflict with the relevant Chinese laws and regulations shall be made by a lawyer
for the aforesaid materials.
Article 4
The term “currency brokerage company” as mentioned in paragraph 1, Article 7 of the Measures includes a legal-person institution
that directly engages in the currency brokerage operation or its parent company that directly controls the shares thereof.
Article 5
An applicant shall submit the application materials for establishment preparation of a currency brokerage company according to the
provisions of Article 13 of the Measures. Thereinto:
(1)
An Application for Establishment Preparation shall include such contents as the name, planned place of registration, registered capital,
planned scope of business operation, names of capital contributors and their capital contributions respectively.
(2)
An Application Form for Establishment Preparation (see Attachment I for the format), an Application for Establishment Preparation,
an Agreement on Joint Venture (or the Promoter’s Agreement) which shall be conducted by all the capital contributors (or promoters)and
signed by the legal representative and affixed with the entity seal. The proportion of capital contribution, rights and obligations
of capital contributors (or promoters) shall be clarified in the Agreement on Joint Venture.
(3)
The constitution of a currency brokerage company shall at least include the following contents: name and domicile of the company,
organizational structure, scope of business operation, registered capital, names of shareholders and amount of capital contributions,
rights and obligations of shareholders, its legal representative, organization and the formation thereof, functions and power, rules
of procedure, measures for distributing company profits, particulars of dissolution and measures for settlement.
(4)
A capital contributor within the Chinese territory shall provide a photocopy of its Business License (duplicate) (the photocopy shall
be affirmed by the administrative department for industry and commerce and shall be affixed with the seal thereof); a capital contributor
in a foreign country shall provide a photocopy of its Business License or any other financial business license, and the photocopy
shall be notarized by an organization that has been recognized by the country or region where it is located or be accredited by the
embassy (consulate) of the People’s Republic of China in the relevant country or region.
(5)
Where an overseas capital contributor is subject to the supervision of the financial regulatory body of the country or region where
it is located, an Opinion Letter of approval for the establishment of a currency brokerage company as prescribed in paragraph 5,
Article 13 of the Measures shall be issued by the financial regulatory body or the financial industrial association. And
(6)
The basic information of a capital contributor includes its name, place of registration, legal representative, photocopy of its Business
License, diagram of the organizational structure of the capital contributor and the group to which its belongs, roster of major shareholders
who make capital contribution, roster of the branches of the capital contributor as well as roster of major associated enterprises,
and business operation circumstance.
Article 6
An applicant that has obtained the license for establishment preparation of a currency brokerage company and applies for renewing
the term for establishment preparation shall submit to the banking regulatory bureau the relevant materials such as an Application
Form for Postponed (see Attachment II for the format) and a report on the application for postponed 1 months before the expiration
of establishment preparation, wherein the reasons for postponed shall be explained and the report on the application for postponed
shall bear the signatures of the legal representatives of all parties concerning capital contribution and be affixed with their entity
seals.There shall be only one renewal with an extension of no more than 3 months.
Article 7
Where the work of establishment preparation is concluded, an applicant shall submit to the banking regulatory bureau the materials
as prescribed by Article 17 of the Measures as well as the non- preserving legal opinion that have no conflict with the relevant
Chinese laws and regulations issued by a lawyer for the aforesaid materials. Thereinto:
(1)
An Application Form for Business Start-up (see Attachment III for the format) and a report on the application for business start-up
shall be issued by all the capital contributors (promoters) and bear the signature of their legal representatives and be affixed
with their entity seals.
(2)
The content of the report on the application for business start-up shall include such matters as the explanation to completion of
the work of establishment preparation, and etc.
(3)
The bylaws of started business operation and the internal risk control system, including the comprehensive, systematic and written
policies, system and procedures as formulated concerning all business operations and management of the company. And
(4)
A security testing report on the trading place, equipment and system, including the original document of inspection and acceptance
concerning its business place and the relevant facilities for operation issued by the departments of public security and fire control.
Article 8
The CBRC shall take charge of verifying the application for business start-up of a currency brokerage company as well as for its business
scope. The CBRC shall take charge of issuing the Financial Business License to wholly foreign-funded currency brokerage companies
and joint-venture currency brokerage companies. The banking regulatory bureaus shall take charge of issuing Financial Business License
to Chinese-funded currency brokerage companies.After a decision on approval for the establishment of a currency brokerage company
is made, the CBRC or the banking regulatory bureau shall issue a Financial Business License thereto within 10 days.
Article 9
The CBRC or the banking regulatory bureau shall inform a currency brokerage company to be established to go to the CBRC or the banking
regulatory bureau to collect the Financial Business License with the following materials:
(1)
The approval documents issued by the CBRC;
(2)
An Introduction Letter of a financial institution;
(3)
The legal and valid identity certification of the person who collects the Financial Business License; and
(4)
Any other material as required by the CBRC or the banking regulatory bureau.
Article 10
A currency brokerage company shall publicly show its Financial Business License, business scope as well as person-in-charge in an
eye-catching position of its business place. The CBRC and its dispatched offices shall carry out supervision and examination on the
publication according to law.
Article 11
A wholly foreign-funded currency brokerage company or joint-venture currency brokerage company that has obtained the approval of the
CBRC for its business start-up shall go to the Ministry of Commerce of the People’s Republic of China to collect the Approval Certificate
of the People’s Republic of China for Foreign-funded Enterprises with the approval documents and the Financial Business License
issued by the CBRC.
Article 12
In a currency brokerage company, 60% or more of its personnel shall have engaged in financial undertaking or the relevant business
operation. The application materials concerning the business start-up of a new currency brokerage company shall include the proportion
of the personnel who have engaged in financial undertaking or the relevant business operation among its practitioners.
Article 13
Such materials as application for establishment preparation and for business start-up that are submitted by an applicant shall be
in triplicate and the Chinese texts thereof shall function as the basis.
Article 14
The procedures for examining the establishment preparation and business start-up of a branch of a currency brokerage company as well
as the time limit of examination shall comply with those applied to the legal-person institution of a currency brokerage company.
Article 15
Where a currency brokerage company establishes a representative office, it shall submit the application materials to the banking regulatory
bureau where its representative office is to be established according to the provisions of Article 28 of the Measures. The banking
regulatory bureau shall, within 20 workdays after accepting the application materials, conclude the examination and report them to
the CBRC. The CBRC shall, within 2 months after receiving the complete application materials, make a written decision on whether
or not an approval shall be granted.
Chapter III Administration of the Qualification for Assuming the Post of Director or Senior Manager
Article 16
The directors and senior managers of a currency brokerage company include board chairman, vice board chairman, executive director,
non-executive director, general manager, deputy general manager, chief financial officer (CFO), person-in-charge of the internal
examination or inspection department, manager of its branch, chief executive director (CEO) of its representative office as well
as the personnel who bear the same functions and duties of the aforesaid posts but in different post_titles in a currency brokerage company
or who don’t assume any of the aforesaid posts but have the decision-making power in the operation and management or play an important
role in the risk control of a currency brokerage company.
Article 17
To obtain the qualification for assuming the post of director and senior manager in a currency brokerage company, a candidate shall
have sound consciousness of observing laws and regulations, be familiar with the laws, administrative regulations and rules on post
assumption and shall not have any serious illegal or rule-breaking record.Where a candidate is under any of the following circumstances,
he shall not be approved to obtain the qualification for post-assumption:
(1)
Having any record of intentional crime;
(2)
Having assumed the post of legal-person representative of an organization that has been taken over, cancelled, merged or has been
declared bankruptcy;
(3)
His qualification for assuming the post of director or senior manager has been cancelled by any supervisory institution or any other
financial regulatory body for accumulatively 10 years or more;
(4)
Having been imposed upon any other administrative punishment other than the punishment of canceling its qualification for post-assumption
by any supervisory institution or any other financial regulatory body for 3 times; or
(5)
Having engaged in any fabrication of false account, business operation that is not recorded in its account or any other activity intended
to violate the accounting system, or instigated or indulged the institution where he works to do so.
Article 18
To obtain the qualification for assuming the post of director or senior manager in a currency brokerage company, a person shall be
creditworthy, diligent and dutiful and have good personal fame.
Article 19
A currency brokerage company shall formulate clear and clarified internal policies and procedures so as to guarantee that the directors
and senior managers whom it is about to appoint or has already appointed meet the requirements for post-assumption qualification
as prescribed in the present Detailed Rules.The CBRC as well as its dispatched offices may carry out examination on the aforesaid
policies and procedures of currency brokerage companies.
Article 20
To obtain the qualification for assuming the post of director or senior manager in a currency brokerage company, a candidate shall
have the relevant knowledge, experience and capability compatible with the post to be assumed. A candidate who applies for the qualification
for assuming the post of director shall meet the following conditions:
(1)
Having a work experience for more than 5 years on law, economy, finance, financial management or any other aspect conducive to performing
the functions and duties of a director;
(2)
Being able to employ the financial statements and statistical statements of a financial institution to judge the situation of business
operation, management and risk thereof; and
(3)
Being well understand of the corporate governance structure, constitution as well as the functions and duties of the board of directors
of the company where he is to work.When applying for the qualification for assuming the post of senior manager at any level, a candidate
shall be well understand of the functions and duties of the post to be assumed, the management frame, profit-making mode, risk management
as well as the internal control system of the organization where he is to work.When applying for the qualification for assuming the
post of director or senior manager at any level, a candidate shall further meet the following conditions:
(1)
To assume the post of board chairman, executive director or general manager, shall have an academic background of university graduate
or above, the relevant work experience on financial undertaking for more than 10 years or on the relevant business for more than
15 years (in particular, work experience on finance for more than 5 years) as well as the experience of holding the post of manager
in the operation department or holding any equivalent post at or above the manager level for more than 3 years;
(2)
To assume the post of vice board chairman, deputy general manager or manager of a branch, shall have an academic background of university
graduate or above, the relevant work experience on financial undertaking for more than 5 years or on the relevant business for more
than 10 years (in particular, work experience on finance for more than 3 years) as well as the experience of holding the post of
manager in the operation department or holding any equivalent post at or above the manager level for more than 2 years;
(3)
To assume the post of CFO, shall have an academic background of university graduate or above and the relevant work experience on
financial management, accounting or auditing for more than 6 years;
(4)
To assume the post of CEO of a representative office, shall have an academic background of university graduate or above and the relevant
work experience on finance undertaking or on the relevant business for more than 3 years; and
(5)
Where a candidate fails to have an academic background of university graduate or above, he shall obtain the qualification for certified
public accountant, public registered auditor or the qualification for senior professional technical post_title relating to the post to
be assumed and a practicing experience for more than 4 years shall be added in addition.Where a candidate who has been the person-in-charge
of an organization that is taken over, cancelled or announced bankruptcy for consecutive losses or serious losses fails to prove
that he is not basically responsible for the aforesaid circumstances, the post-assumption qualification thereof shall not be verified.
Article 21
The CBRC or its dispatched office may, after inspecting and recognizing that a candidate does have the relevant knowledge, experience
and capability compatible with the post to be assumed, make a decision on properly easing the requirements for practice term limitation.
Article 22
A currency brokerage company shall report to the local banking regulatory bureau the complete application materials of post-assumption
qualification before a selected candidate assumes his post. The CBRC or its dispatched office shall, within 30 workdays as of receiving
the complete application materials, make a decision on approval or disapproval and shall reply to the currency brokerage company
in written form.
Article 23
A currency brokerage company shall submit to the local banking regulatory bureau complete paper application materials in triplicate,
which shall at least include:
(1)
A letter for approving on the qualification for a candidate to assume his post, including the statements on the post_title, functions and
duties as well as power of the new post;
(2)
A report on reviewing whether or not a selected candidate meets the requirements for post-assumption qualification according to the
internal policies and procedures prescribed in Article 19 of the present Detailed Rules, including the way, evidence and conclusion
of the reviewing.;
(3)
An Application Form for Post-assumption Qualification as filled out by a selected candidate (see Attachment IV for the specific format);
(4)
The photocopy of the identity certification of a selected candidate as well as the certification document of his academic background
(academic degree);
(5)
A statement, bearing the signature of a selected candidate, that he has not been under any circumstance prescribed by the present
Detailed Rules where the post-assumption qualification shall not be approved;
(6)
A detailed statement, bearing the signature of a selected candidate, on his practice experience;
(7)
A detailed statement, bearing the signature of a selected candidate, on his plan for performing his functions and duties; and
(8)
Any other material as required by the CBRC or the banking regulatory bureau.The aforesaid application materials mentioned in items
(1), (2) and (3) shall bear the signature of the signer authorized by the currency brokerage company or the official seal of that
company.The banking regulatory bureau may, according to the requirements of the real situation, require the relevant institution
to provide the corresponding electronic texts.
Article 24
After the banking regulatory bureau receives the application materials for post-assumption qualification and if it’s necessary for
the relevant currency brokerage company to supplement and correct the materials as submitted, the bureau shall inform the currency
brokerage company within 5 workdays. Where the banking regulatory bureau files no demurral within 5 workdays as of receiving the
application materials for post-assumption qualification, it shall be deemed that the banking regulatory bureau has accepted the application.A
currency brokerage company shall, if it’s required so, supplement and correct its application materials within the time limit as
prescribed by the banking regulatory bureau. Where any company fails to make supplementation and correction within the time limit,
the banking regulatory bureau may make a decision on refusing to accept the application materials, return them to the relevant company
as well as refuse to accept the same application of the said company within 3 months therefrom.
Article 25
The CBRC or its dispatched office may, according to the requirements of the real situation, carry out on-the-spot investigation or
have a talk with the selected candidate so as to judge whether or not he meets the requirements for post-assumption qualification
as prescribed in the present Detailed Rules.Where a talk is held, the relevant record shall be confirmed by the selected candidate
and be guaranteed the authenticity of his state . The record shall be part of the basis for the CBRC or its dispatched office to
examine the post-assumption qualification.
Article 26
Without the approval of the CBRC or its dispatched office, none of the senior managers in a currency brokerage company such as the
board chairman, vice board chairman, executive director, general manager, deputy manager, CFO, and principal of the department of
internal examination or inspection shall hold any concurrent post in any Party or government organ or post of senior manager in any
other profit-making organization within their tenure.
Article 27
The board chairman of a currency brokerage company shall not hold the concurrent post of general manager therein. A director shall
not hold the concurrent post of senior manager of any other profit-making organization that has any interest conflict with his company.
Article 28
Where any board chairman or general manager of a currency brokerage company fails to perform his functions and duties due to any reason
for 1consecutive month or more, he shall authorize other senior manager to perform the functions and duties on his behalf and shall
report it to the dispatched office of the local banking regulatory bureau for archival filing in advance. Where anyone fails to perform
his functions and duties for 3 consecutive months, he shall be replaced.
Article 29
Where any board chairman or senior manager of a currency brokerage company resigns from his company, an auditing report thereon shall
be produced by the currency brokerage company or a external auditing organization recognized in written form by currency brokerage
company and shall be affixed with the seal of the organization that produced the report .
Article 30
A currency brokerage company may issue a formal employment (appointment) document only after its selected candidate has obtained the
post-assumption qualification as approved by the CBRC or its dispatched office, and thereafter may the relevant person begin to perform
his functions and duties.A currency brokerage company shall, within 3 months after the CBRC or its dispatched office issues the approval
document of post-assumption qualification, submit the photocopy of the employment (appointment) document to the banking regulatory
bureau for archival filing.
Article 31
The other provisions on the approval, termination, daily administration and legal liabilities of post-assumption qualification of
directors and senior managers of currency brokerage companies shall be implemented according to the relevant provisions of the CBRC.
Chapter IV Risk Control and Supervision and Administration
Article 32
A currency brokerage company shall establish a comprehensive risk management system, focusing on risk control and including the following
contents:
(1)
A currency brokerage company shall establish the board of directors and the independent departments of internal examination and regulation
compatibility.
(2)
A currency brokerage company shall establish sound corporate governance and an organizational structure with reasonable work division,
clarified functions and duties and clearly specified reporting relations as well as a scientific and highly-efficient mechanism for
decision-making, incentive and restriction. And
(3)
A currency brokerage company shall, according to the provisions of the Measures, carry out its operation according to law and the
principles of impartiality, fairness, creditworthiness and confidentiality for clients, establish and improve an internal control
system and report it to the local banking regulatory bureau for archival filing.
Article 33
A currency brokerage company shall, according to the provisions of Article 46 of the Measures, improve its facilities and preserve
the complete trading information. The company shall formulate a emergency plan for any special circumstance of malfunction of communications
circuit or trading system and shall make back-up of trading information materials in a different place on a daily basis so as to
guarantee the smooth proceeding of transaction as well as the intactness and security of information materials.
Article 34
A currency brokerage company shall formulate and implement a reasonable marketing plan according to the requirements of its business
operation.
Article 35
A currency brokerage company shall carry out its business operation on a stable basis. In the case of any loss resulting from the
market situation, the company shall formulate effective measures therefor in a timely manner, adjust its operating policy and control
the corporation scale so as to cease the loss and begin to turn out a profit as soon as possible. For a currency brokerage company,
its losses in the first year shall not exceed 50% its registered capital and the total amount of losses in the first 3 years shall
not exceed 30% its registered capital. For any branch of a currency brokerage company, its losses in the first year shall not exceed
30% its working capital and the total amount of losses in the first 3 years shall not exceed 10% its working capital.
Article 36
Where a currency brokerage company or any of its branches operates at a loss which exceeds the amount as prescribed in the aforesaid
provisions of Article 35 due to the market situation, it shall report it to the CBRC or its dispatched office in a timely manner
and supplement its registered capital and working capital in a timely manner.
Article 37
A currency brokerage company shall, according to Articles 48, 49 and 50 of the Measures as well as the relevant regulatory provisions
of the CBRC or its dispatched office, report to the local banking regulatory bureau its financial statements, reports on the implementation
of all regulatory indicators as well as other materials as required by the CBRC or its dispatched office that all bear the signature
of its legal representative on a periodic basis. The legal representative of a currency brokerage company shall bear the final liabilities
for the authenticity of the aforesaid materials.
Article 38
The CBRC and its dispatched offices shall, by means of on-the-spot examination or not-on-the-spot examination, carry out an overall
examination on the implementation of the risk management system of a currency brokerage company focusing on the legal-person governance
structure and internal control system. Where any currency brokerage company fails to meet the regulatory requirements, the CBRC or
its dispatched office may require it to make rectification and correction, suspend part of or all of its business operation or stop
its business for rectification.The CBRC and its dispatched offices may designate any intermediary organ that has the relevant qualifications
to conduct on-the-spot examination on a currency brokerage company.
Chapter V Supplementary Provisions
Article 39
The term “currency brokerage operation” refers to the business operation as prescribed in Articles 33 and 34 of the Measures.
Article 40
The present Detailed Rules shall come into force as of the day of promulgation and the power to interpret it shall remain with the
CBRC.
China Banking Regulatory Commission
November 8, 2005
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