China Securities Regulatory Commission issues baseline rules to standardise administrative penalty discretion from 1 March 2025

The China Securities Regulatory Commission (CSRC) issued the Administrative Penalty Discretion Basic Rules, setting a quantified framework for how securities and futures administrative penalties should be assessed and applied, with effect from 1 March 2025. The 25-article rules establish six tiers of discretion, ranging from no penalty and exemption from penalty through mitigated and lenient treatment to general and heavier penalties, and specify when each tier applies. They also set core decision rules for enforcement, including an approach for joint violations that requires an overall assessment followed by differentiated penalties, criteria for assessing the liability and penalty range for directly responsible individuals within an entity, and a principle of cumulative penalties for multiple independent violations. Governance and escalation requirements are introduced, including collective discussion by responsible officials for complex or major cases, and senior approval or collective discussion where application could be clearly inappropriate or unfair or where circumstances have changed. The framework also addresses “three-dimensional accountability” and alignment between administrative penalties and criminal and civil liability, as well as regulatory measures and self-regulatory actions, and sets handling approaches for three types of administrative-criminal case linkage. The CSRC will supervise and guide its local offices in exercising penalty powers to promote consistent application of standards.