Article 2 The term "OTC trading" as mentioned in these Rules refers to the trading between a securities company and a specific counterparty outside the centralized trading place, or the act of providing services for investors to trade outside the centralized trading place.
Securities companies conducting over-the-counter transactions shall abide by these Standards, except in accordance with other market rules.
Article 3 The products traded by securities companies over the counter include basic financial products and financial derivatives that are approved, filed or recognized by relevant state departments or their authorized institutions and issued or sold outside centralized trading places.
Article 4 A securities company shall have the qualifications recognized by China Securities Regulatory Commission (hereinafter referred to as China Securities Regulatory Commission) that are suitable for its business.
Where a securities company conducts over-the-counter transactions with a specific counterparty, it shall engage in self-operated securities business with the approval of the China Securities Regulatory Commission; Securities companies that provide services for investors' transactions shall engage in securities brokerage business with the approval of the China Securities Regulatory Commission.
Article 5 A securities company shall abide by relevant laws and regulations, follow the principles of honesty, credibility, fairness and voluntariness, and shall not deceive or mislead investors, nor seek illegitimate interests by using non-public information.
Article 6 When conducting OTC trading, a securities company shall establish an OTC trading management system, and make clear provisions on the selection of trading products and investors, decision-making and execution of trading, registration and settlement related to trading, trading records and information disclosure.
Securities companies should improve the compliance management system, implement effective compliance management on counter transactions, ensure that counter transactions are conducted in compliance with laws and regulations, and effectively prevent improper use of non-public information for transactions and conflicts of interest between counter transactions and other businesses of the company.
Securities companies should improve the risk management system, continuously evaluate the market risks of various financial products held due to over-the-counter transactions and the credit status of investors, and take effective risk management measures to control the risk exposure held within an acceptable range.
Article 7 Investors participating in over-the-counter transactions shall be qualified investors. A securities company shall establish an investor suitability management system and abide by the relevant provisions of the China Securities Association (hereinafter referred to as the Association) on investor suitability management. Securities companies should take effective measures to understand the identity, property and income status, credit status, financial knowledge, investment experience and risk tolerance of investors before conducting over-the-counter transactions.
Article 8 A securities company shall abide by the relevant provisions on the sale and trading of basic financial products when conducting over-the-counter trading of basic financial products.
When a securities company conducts over-the-counter trading of financial derivatives, it shall objectively and comprehensively introduce the nature of the transaction, risk-return characteristics and related basic financial assets to non-financial institutional investors, and fully disclose whether there is any relationship between it and related parties such as issuers of basic financial assets and other information that may affect investors' decision-making.
Article 9 When conducting OTC trading, a securities company shall sign a written or electronic OTC trading contract with a specific counterparty or investor to stipulate the rights and obligations of both parties.
Over-the-counter trading contracts of financial derivatives shall comply with the relevant provisions of the Association on the master agreement and supporting documents of financial derivatives.
Article 10 Where a securities company and an investor agree on mortgage, pledge and other property guarantees, they shall go through the formalities for establishing the guarantee according to law. Where a performance bond is collected from an investor, it shall be deposited in a special account of a financial institution agreed by both parties and shall not be used in violation of the contract.
Article 11 A securities company shall settle transactions for investors in the way agreed in the OTC contract. If the settlement of OTC trading funds is handled through the securities company's own fund account and the special deposit account for customer trading settlement funds as agreed, the transfer of relevant funds shall comply with the provisions on the custody of customer trading settlement funds.
Article 12 Where a securities company conducts over-the-counter trading, it shall record the holdings and changes of the products traded by investors over the counter. A securities company shall timely, accurately and completely record the information related to OTC trading, and keep it properly in accordance with the provisions of the Securities Law.
Securities companies should take effective measures to ensure that investors can inquire about the contents of OTC contracts signed with securities companies and their holdings of basic financial products and financial derivatives during business hours.
Article 13 The Association shall conduct self-discipline management and daily monitoring over the counter trading activities of securities companies in accordance with these Standards.
Securities companies that conduct over-the-counter transactions shall submit the following materials to the Association for the record:
(a) the implementation plan of OTC business;
(2) The company's resolution on OTC trading.
A description of the investor's suitability management system, internal control system and risk prevention mechanism;
(4) OTC trading rules.
(5) Other documents required by the Association.
Article 14 When a securities company conducts over-the-counter trading, its over-the-counter trading management system and implementation plan shall pass the professional evaluation organized by the association.
Within 1 month from the date of accepting the filing materials submitted by securities companies, the association will organize experts to evaluate the OTC trading business plan of securities companies. If the expert review is passed, the association will issue a written opinion to confirm the record within 5 working days; If the expert review is unqualified, the association will not put it on record and notify the reasons in writing.
Article 15 A securities company shall report the relevant business information of its over-the-counter trading to the Association.
A securities company shall submit a monthly report on OTC trading to the Association within 5 working days after the end of each month and an annual report on OTC trading to the Association within 1 month after the end of each year.
When a major event occurs that may affect the smooth progress of over-the-counter trading, the interests of investors, or may induce the risks of securities companies, securities companies shall report to the Association in time, and explain the reasons, treatment measures and impacts of the major event.
Article 16 Securities companies shall abide by the self-discipline rules formulated by the Association when conducting over-the-counter transactions. The Association shall inspect the over-the-counter transactions of securities companies, and the securities companies shall cooperate with them.
Seventeenth securities companies and their related business personnel in violation of the provisions of this specification, the association will take relevant self-discipline measures according to the seriousness of the case, and recorded in the integrity information management system; If there is any violation of laws and regulations, it will be handed over to the CSRC or other competent authorities for investigation and punishment according to law.
Article 18 The Association shall be responsible for the interpretation of these Standards and shall come into force as of the date of promulgation.