Shanghai Stock Exchange, Members Administration Rules

Issued: February 26 2007
Effective: May 1 2007
Interpreting Authority: Shanghai Stock Exchange (Stock Exchange)

Main Contents: The Rules cover the administration of membership qualifications, seats, members' trading rights, and securities trading and related operations; day-to-day administration concerning member representatives, reports and notices from members, membership fees and dispute resolution; supervision and inspection of the securities transactions of members; and disciplinary penalties for violation of the business rules of the Stock Exchange.

The Stock Exchange will impose a quota system over the total number of seats. No new seat will be added. Members may obtain a seat by way of transfer from other members (Article 3.2). Members shall introduce the types of products for trading and relevant business rules to clients. For specific transactions, a risk disclosure agreement shall be concluded with the client to disclose the risks that may arise from securities investments as required by the Stock Exchange (Article 4.1.4). If a member, when it accepts the entrustment of a client, discovers irregular trading activities, it shall notify and remind the client, and may refuse to accept entrustment of the irregular trading activities that may seriously affect the normal trading order. It shall also report such irregularities to the Stock Exchange in a timely manner (Article 4.1.10). Where there are irregularities in the trading of securities of members on their own account or in the trading relating to their asset management business, such irregularities shall be reported to the Stock Exchange in a timely manner (Article 4.1.14). Members shall cooperate with the regulation of the Stock Exchange, explain the situation in a timely manner and provide the relevant business statements, account books, original certificates, account opening information and other documents and information as required by the Stock Exchange (Article 6.4).