China releases draft rules to open up its securities sector

On 9 March 2018, the China Securities Regulatory Commission (“CSRC”) issued the long-awaited consultation draft rules (“Draft Rules”) on the establishment of foreign invested securities companies (“Securities JVs”), with a consultation period of one month.

The Draft Rules set out the proposed changes to the regime on the establishment of Securities JVs which will involve, amongst other things, increase in the maximum foreign ownership percentage from 49 per cent. to 51 per cent. and the removal of restrictions on foreign ownership in 3 years following the effective date of the increase to 51 per cent., as committed by the PRC government in November 2017 (see our earlier alert).

In this alert, we discuss how the PRC government plans to implement its commitments to liberalise the securities sector, what restrictions on foreign ownership are expected to remain, and the proposed rule changes.