In the News: Algorithm Regulation Finalized; STAR Market Maker; and Exclusive Music Rights

January 11, 2022 | BY

Vincent Chow

Groundbreaking algorithm recommendation regulation finalized; CSRC pilots market makers for STAR Market; and copyright administration prohibits digital music exclusive copyright arrangements

Shanghai

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Algorithm recommendation regulation finalized, fines tripled

China has finalized its groundbreaking algorithm regulation, which will come into effect on March 1. On January 4, the Cyberspace Administration of China, the Ministry of Industry and Information Technology, the Ministry of Public Security, and the State Administration for Market Regulation jointly published the Provisions for the Administration of Algorithmic Recommendations in Internet Information Services (互联网信息服务算法推荐管理规定).

The finalized rules apply to the application of algorithmic recommendation technology such as personalized push, sorting and selection, and information filtering services. Users must be provided with options to switch off such algorithmic recommendation services,

The finalized version of the regulation retains most of its draft form, with the addition of four major modifications. First, whereas the draft version emphasized the right of users to request firms explain how algorithm recommendation technology is being used, the finalized version requires firms provide that information by default (Article 17). Second, a new article was added to target internet news information services that involve algorithmic recommendation services, which must "not generate or disseminate false news information" (Article 13). Third, services targeting the elderly must "fully consider the needs of the elderly for travel, medical treatment, consumption, and errands, and provide intelligent elderly-appropriate services in accordance with relevant national regulations" (Article 19). Fourth, fines for violations have been tripled to a maximum RMB 100,000 ($15,700). 

More from CLP:

AI push: China Begins AI Regulatory Push with Data Protection Focus

PIPL: The PRC Personal Information Protection Law and its Regulatory Impact on Multinational Entities

CSRC to pilot market maker scheme for STAR Market

China's securities regulator will pilot market-making on Shanghai's Science and Technology Innovation Board (STAR Market). On January 7, the China Securities Regulatory Commission (CSRC) released the draft Regulations on the Pilot Program of Stock Market Making and Trading Business on the Science and Technology Innovation Board of Securities Companies (证券公司科创板股票做市交易业务试点规定(征求意见稿)) for public consultation until February 6.

The draft rules contain 17 articles covering six main topics, including market access conditions, risk monitoring and regulatory enforcement. There are strict criteria for securities firms eligible to participate in the pilot scheme, including a net capital requirement of more than RMB 10 billion ($1.6 billion) in the last 12 months and a classification rating in the last three years of Class A (Article 3).

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