Brokerage firms' impairment provision work meets regulatory standards, requiring full coverage of on- and off-balance sheet financial instruments.

The Securities Association of China (SAC) today released the "Guidelines for Impairment of Financial Instruments by Securities Companies," guiding securities firms to value and impair financial instruments in a scientific and reasonable manner to prevent financial risks. The "Guidelines" require that impairment provisioning work should follow the principles of comprehensiveness, truthfulness, prudence, dynamism, matching, and forward-lookingness, especially ensuring that impairment provisioning covers all types of financial instruments both on and off the balance sheet, and that internal controls and decision approval processes cover the entire impairment handling process. The "Guidelines" also specify the specific conditions and management requirements for writing off impaired assets by securities firms, and clarify the conditions and approval procedures for writing off financial assets, strengthening the management of impairment and disposal of financial assets. SAC will supervise securities firms to ensure the impairment provisioning of financial instruments is done well, and if there are cases where the evaluation of expected credit losses is not careful or where expected credit losses are used to adjust profits, financial indicators, etc., self-regulatory measures will be taken.