The central bank seeks public opinions on the "Interbank Market Brokerage Business Management Measures (Draft for Solicitation of Comments)"

On July 18th, the People's Bank of China publicly solicited opinions on the "Interbank Market Brokerage Business Management Measures (Draft for Soliciting Opinions)", which includes 26 articles. The main contents include: clarifying the types of brokerage institutions and their scope of practice. Clarifying the requirements for entry into the market and risk isolation for brokerage institutions. Strengthening the qualification management requirements for clients. Strengthening information disclosure and communication tool usage requirements. Clarifying prohibited behaviors. Improving regulatory requirements and penalties. Here is the original text: Interbank Market Brokerage Business Management Measures (Draft for Soliciting Opinions) Chapter 1 General Provisions Article 1 [Purpose of formulation] In order to regulate the brokerage business conducted by brokerage institutions and financial institution investors (hereinafter referred to as clients) in the interbank RMB market (hereinafter referred to as the interbank market), maintain the stable operation of the interbank market, protect the legitimate rights and interests of market participants, and in accordance with the relevant laws and regulations such as the Law of the People's Republic of China on the People's Bank of China, these measures are formulated. Article 2 [Types of institutions] The brokerage institutions referred to in these measures include specialized currency brokerage companies engaged in brokerage services, and other financial institutions that provide brokerage services to clients. Article 3 [Definition of brokerage] The brokerage business and brokerage services referred to in these measures mean intermediary services provided by brokerage institutions to facilitate financial transactions, such as providing quotation inquiry information and trade matching intentions accepted by clients. Article 4 [Business scope] Brokerage institutions may provide brokerage services to clients in the interbank bond market, money market, bill market, gold market, and related derivative markets based on client needs, and may not provide brokerage services for financial institutions' participation in bond issuance and counter-bond trading business. Chapter 2 Brokerage Institutions and Practitioners Article 5 [Business report] In entering the interbank market to engage in brokerage businesses, brokerage institutions shall report to the People's Bank of China, provide materials such as the rules of brokerage business, internal risk management systems, etc., and perform approval and record procedures in accordance with the relevant regulations of financial regulatory authorities. Article 6 [Risk control] Currency brokerage companies shall have sound business management systems and internal control systems, prudently carry out related businesses, and take effective measures to prevent risks. Other brokerage institutions not specialized in brokerage business shall establish independent brokerage business departments, equipped with professional brokerage personnel and specialized brokerage channels, and strict segregation between brokerage business and proprietary business. Article 7 [Disclosure of major events] Before major events such as reduction of capital, merger, spin-off, dissolution, custody, suspension of business, bankruptcy application, involvement in major litigation, significant changes in major shareholders, and other major events specified by the People's Bank of China, brokerage institutions shall report to the People's Bank of China and announce to the market within 3 working days after the occurrence of such events. Article 8 [Qualification requirements for practitioners] Before starting work, brokerage institution practitioners must undergo relevant professional training, conduct annual training, and require practitioners to strictly adhere to the professional ethics of the brokerage industry. Supervisory personnel in charge of brokerage business departments shall have more than 5 years of experience in the financial market, while brokerage personnel shall have more than 1 year of experience in the financial market and be familiar with the relevant regulations and business rules of the interbank market. Chapter 3 Business Management Article 9 [Client management] Before providing brokerage services to clients in the interbank market, brokerage institutions shall conduct due diligence on the qualifications of clients, shall not provide services to non-interbank market participants, and shall not provide market brokerage services to institutions that have not signed main agreements such as bond repurchase, bond lending, derivative trading, etc. Article 10 [Signing of agreements] Brokerage institutions shall sign service agreements with clients, fully explain to clients the quotation and matching rules, service fee rates, priority of obtaining quotations, etc., and conduct business strictly in accordance with the agreements, treat clients fairly, and keep client information confidential. Financial institution investors receiving brokerage services should sign agreements. Brokerage institutions shall not directly or indirectly provide brokerage services such as inquiry, quotation, and matching to clients who have not signed agreements. Article 11 [Standardization of quotations] Brokerage institutions shall provide accurate inquiry and quotation information to clients, reflecting the instructions received from clients truthfully, and shall not make false quotations. The quotations and transaction intentions shown to clients by brokerage institutions shall clearly follow the rules and be displayed in accordance with the rules. Article 12 [Matching intentions] Brokerage institutions conducting matching business in the interbank market shall follow the principles of fairness, impartiality, honesty, and trustworthiness. Brokerage institutions shall conduct trading matching for actual client institutions and shall not provide matching services to non-interbank market participants, except for settlement agents representing overseas institutions requesting quotations. Article 13 [Information disclosure] Brokerage institutions shall publicly disclose the best brokerage quotations and transaction details in real-time, complete, and accurate manner, and shall not selectively display, not display, or delay the display of quotation and transaction information. Article 14 [Data submission] Brokerage institutions shall submit to the relevant systems of the interbank market infrastructure the quotations and matching transaction information of client transactions in the interbank market in a timely, complete, and accurate manner. Article 15 [Communication tools] Brokerage institutions shall use communication tools that ensure the identity and authenticity of client personnel to accept orders and feedback transactions. Instant messaging tools used by brokerage institutions to provide brokerage services shall meet the following conditions: (1) The communication accounts used by client personnel shall be authorized by the institution and strictly separated from personal accounts; (2) Ensure that users register with their real identity information and verify the identity information submitted by users; (3) All chat records, including text, voice, expressions, images, files, etc., shall be completely stored in the domestic secure database and kept for at least 5 years; (4) Support the retrieval of historical communication records for monitoring, dispute resolution, and other purposes. Article 16 [Communication management] Brokerage institutions shall establish sound communication management systems and strengthen the management of various communication tools. The expressions provided by brokerage institution practitioners to clients, such as inquiries and quotations, must meet the standard requirements. The mobile phones, handheld computers, and other mobile communication tools used by brokerage institution practitioners during trading hours shall be centrally kept. The fixed telephones of brokerage institutions shall be recorded. Instant messaging tools that meet the requirements shall be monitored and fully recorded. Recordings, communication records, and other trading-related materials shall be fully recorded throughout and kept for at least 5 years. Article 17 [Prohibited behaviors] Currency brokerage companies, brokerage business departments established by other brokerage institutions, and brokerage practitioners operating in the interbank market shall not engage in the following behaviors: (1) directly or indirectly hold trading positions; (2) directly or indirectly control trading accounts; (3) obtain undue profits during the matching process using advantages of brokerage business information, etc.; (4) manipulate market prices by using insider information, colluding with clients to conduct fraudulent transactions, false quotations, etc.; (5) Providing brokerage services beyond the scope allowed by regulations or providing brokerage services to clients who do not meet the requirements; (6) Treat clients unfairly, engage in price discrimination, price misleading, or other behaviors that harm the interests of clients; (7) Not actually providing matching services, falsely leave records; (8) Fail to comply with information disclosure rules in electronic information channels, selectively disclose or tamper with quotation information; (9) Actively or cooperate with a third party to arrange trading chains, evade regulation, evade internal controls, engage in misconduct such as benefit transfer; (10) Engage in marketing activities that go beyond legitimate business practices and disrupt market order; (11) Use communication tools that do not meet requirements to provide brokerage services, or fail to meet communication management requirements; (12) Fail to promptly, completely, and accurately submit market reports, data, or personnel information; (13) Other behaviors that violate laws and regulations and relevant regulatory provisions. Chapter 4 Supervision and Management Article 18 [Supervision and management] The People's Bank of China and its branches shall supervise and manage the brokerage business of brokerage institutions in the interbank market in accordance with the law. The People's Bank of China and its branches may conduct law enforcement inspections of brokerage institutions. Article 19 [Monitoring, self-regulation] Interbank market-related infrastructures monitor the business operations of brokerage institutions through relevant systems. Interbank market self-regulatory organizations manage brokerage institutions through self-regulation. Brokerage institutions shall provide truthful, accurate, and complete information to interbank market infrastructures and self-regulatory organizations. Article 20 [Regulatory coordination] Financial regulatory authorities shall supervise and inspect the internal control system construction and business conduct of managed financial institutions according to their respective responsibilities, and impose penalties on violations of laws and regulations. The People's Bank of China and all financial regulatory authorities shall establish a coordination mechanism for the supervision of brokerage business, strengthen information sharing and communication coordination. Chapter 5 Legal Liability Article 21 [Responsibility of brokerage institutions] If brokerage institutions have serious circumstances such as those listed below, the People's Bank of China may impose administrative penalties in accordance with the Law of the People's Republic of China on the People's Bank of China and other laws and regulations: (1) If the brokerage institution violates the provisions of Article 17 of these measures or engages in other behaviors that violate these measures; (2) If the brokerage institution fails to cooperate with business monitoring, self-regulatory management, or practitioner management as required by these measures; (3) If the brokerage institution engages in behaviors that violate other interbank market-related regulatory requirements and business rules. Article 22 [Responsibility of clients] Financial institutions participating in the interbank market using brokerage services provided by brokerage institutions shall comply with the relevant provisions of these measures. If they violate the relevant provisions of these measures, the People's Bank of China may impose administrative penalties in accordance with the Law of the People's Republic of China on the People's Bank of China and other laws and regulations. Article 23 [Investigation and handling of illegal activities] Brokerage institutions that engage in insider trading, market manipulation, benefit transfer, illegal business operations, and other illegal activities shall bear corresponding responsibilities in accordance with the law; if they are suspected of violating the Securities Law and meet the relevant filing standards, they shall be transferred to the securities regulatory authorities for punishment; if they are suspected of committing crimes, they shall be transferred to judicial authorities for criminal responsibility in accordance with the law. Chapter 6 Supplementary Provisions Article 24 [Interpretation] These measures shall be interpreted by the People's Bank of China. Article 25 [Transition period for supplementary agreements] For new orders accepted after the implementation of these measures, brokerage institutions shall sign service agreements as required. For orders generated before the implementation of these measures, brokerage institutions shall supplement service agreements with clients before *date* 2025 (6 months after the effective date) and meet the conditions stipulated in these measures. Article 26 [Effective date] These measures shall come into effect on *date* 2025. This article is excerpted from: People's Bank of China website; GMTEight editor: Chen Xiaoyi.