China Securities Regulatory Commission issues revised futures company classification evaluation rules with new deduction and bonus scoring framework

The China Securities Regulatory Commission (CSRC) has revised its framework for classifying and evaluating futures companies, renaming it from a “classification supervision” regime to “classification evaluation” rules to better reflect firms’ compliance and risk management capabilities and support more targeted allocation of supervisory resources. The update also streamlines indicators and processes and reduces the use of special evaluation indicators. The revised rules refine the points deduction mechanism by basing deductions in principle on effective regulatory measures, removing duplicate deductions and introducing a more graduated deduction scale. The bonus scoring system is updated by strengthening indicators on serving the real economy and restructuring the “market competitiveness” component into three categories covering nine indicators, intended to assess business development, overall profitability and capital strength. Several indicators are removed, including weighted adjusted average daily institutional client equity, cost management capability and return on net assets. Special evaluations are consolidated into three areas: serving national strategy, Party building and cultural development, and information technology development. Additional bonus incentives apply where firms support regulators in risk resolution, maintain zero deductions for three consecutive evaluation periods, or merge with other futures companies. The CSRC completed a public consultation on the revised rules, reviewed feedback and incorporated reasonable suggestions. It said it will proceed with implementation of the updated provisions.