Securities regulation: No more bad research in China
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Securities regulation: No more bad research in China

Securities firms will get a reputation management score from SAC, limiting their ability to provide balanced views. It looks like a step backwards for the country’s financial system.

By Rebecca Feng


China’s SAC plans to give securities firms a reputation management score

The Securities Association of China (SAC) said in August that it would assign a reputation management score to securities firms based on two criteria: the ability to guide public opinions on the market and regulations; and the ability to handle negative news about themselves.

A draft rule was distributed to leading securities houses on the mainland.

Firms are encouraged to guide public views by publishing research on market regulations or be quoted in media stories. But the devil is in the detail.

The research and quotes must “agree to the official talking points and tones of the SAC,” according to the draft rules. In terms of managing the firms’ reputations, points will be deducted based on the number of negative news stories appearing in media publications and how widely circulated these publications are.

Onshore sources say that firms will be given additional points if their research or opinions are cited in one of the big four state-controlled securities journals, state-controlled Xinhua News, or the official newspaper of the Central Committee of the Communist Party, the People’s Daily.

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