The development of securities markets in China since the commencement of the opening and reform of China inevitably led to the establishment of a centralised market regulatory body. The establishment of the State Council Securities Commission (the "SCSC") and the China Securities Regulatory Commission (the "CSRC") in October 1992 marked the formation of this regulatory body. The SCSC is the State authority responsible for exercising centralised market regulation. The CSRC is the SCSC's executive branch responsible for conducting supervision and regulation of the securities markets in accordance with the law.

The scope of the authority of the SCSC and the CSRC gradually expanded with the growth of the securities markets. In November 1993, the State Council decided to charge the SCSC with the responsibility of the test operation of the futures market to be carried out by the CSRC. In March 1995, the State Council formally approved the Organisational Plan of the China Securities Regulatory Commission thereby confirming CSRC to be a deputy-ministry rank unit directly under the State Council and the executive branch of the SCSC. CSRC was authorised to conduct supervision and regulation of the securities and futures markets in accordance with the law. In August 1997, The State Council decided to put the securities markets in Shanghai and Shenzhen under the supervision of the CSRC. Meanwhile, offices of the CSRC commissioners were set up in the two municipalities. In November 1998, the Central People's Government held the National Finance Conference and decided to reform and reorganise the national securities regulatory mechanism. The local securities regulatory departments will be supervised directly. Organisations engaged in securities formerly supervised by the People's Bank of China were put under the centralised supervision of the CSRC.

In April 1998, pursuant to the State Council Reform Plan, the SCSC and the CSRC were merged to form one ministry rank unit directly under the State Council. Both the power and the functions of the CSRC have been strengthened after the reform. A centralised securities supervisory system was thus established.

In September 1998, the State Council approved the Provisions regarding CSRC's Functions, Internal Structure and Personnel, further confirming CSRC to be one of the enterprise units directly under the State Council and the authorised department governing the securities and futures markets of China. This strengthened and clarified the CSRC's functions.

II. Basic Functions

1. To establish a centralised supervisory system for securities and futures markets and to assume direct leadership over securities and futures market supervisory bodies.

2. To strengthen the supervision over securities and futures business, stock and futures exchange markets, the listed companies, fund management companies investing in the securities, securities and futures investment consulting firms, and other intermediaries involved in the securities and futures business. To raise the standard of information disclosure.

3. To increase the abilities to prevent and handle financial crisis.

4. To organise the drafting of laws and regulations for securities markets. To study and formulate the principles, policies and rules related to securities markets. To formulate development plans and annual plans for securities markets. To direct, co-ordinate, supervise and examine matters related to securities in various regions and relevant departments. To direct, plan and co-ordinate test operations of futures market.

5. To exercise centralised supervision of securities business.

III. Major Responsibilities

1. Studying and formulating policies and development plans regarding securities and futures markets; drafting relevant laws and regulations on securities and futures markets; and working out relevant rules on securities and futures markets;

2. Supervising securities and futures markets and exercising vertical power of authority over regional and provincial supervisory institutions of the market;

3. Overseeing the issuance, trading, custody and settlement of equity shares, convertible bonds, and securities investment funds; approving the listing of corporate bonds; and supervising the trading activities of listed government and corporate bonds;

4. Supervising the listing, trading and settlement of domestic futures contracts; and monitoring domestic institutions engaged in overseas futures businesses in accordance with relevant regulations;

5. Supervising the behavior of listed companies and their shareholders who are liable for relevant information disclosure in securities markets;

6. Supervising securities and futures exchanges and their senior management in accordance with relevant regulations, and securities associations in the capacity of the competent authorities;

7. Supervising securities and futures companies, securities investment fund managers, securities registration and settlement companies, futures settlement institutions, and securities and futures investment consulting institutions; approving in conjunction with the People's Bank of China, the qualification of fund custody institutions and supervising their fund custody business; formulating and implementing rules on the qualification of senior management for the above-mentioned institutions; and granting qualification of the people engaged in securities and futures-related business;

8. Supervising direct or indirect issuance and listing of shares overseas by domestic enterprises; supervising the establishment of securities institutions overseas by domestic institutions; and supervising the establishment of domestic securities institutions by overseas organizations;

9. Supervising information disclosure and proliferation related to securities and futures and being responsible for the statistics and information resources management for securities and futures markets;

10. Granting, in conjunction with relevant authorities, the qualification of law firms, accounting firms, asset appraisal firms, and professionals in these firms, engaged in securities and futures intermediary businesses, and supervising their relevant business activities;

11. Investigating and penalizing activities violating securities and futures laws and regulations;

12. Managing the foreign relationships and international cooperation affairs in the capacity of the competent authorities; and

13. Any other duties as commissioned by the State Council.

The CSRC has one chairman, four vice-chairmen, one secretary general, and two deputy secretaries generals. It has 13 functional departments or offices, 3 subordinate centers, and one special committee. It also has 10 regional offices set up in key cities around the country and a missionary office in every province, autonomous region, cities directly under the jurisdiction of the State Council, and cities enjoying the provincial-level status in the state economic plan.

IV. Organizational Structure of the CSRC