China's financial regulators have recently announced a series of regulatory updates targeting securities firms, futures companies, and the broader interbank market, reflecting ongoing efforts to enhance risk management, market transparency, and support for the real economy.

On August 22, 2025, the China Securities Regulatory Commission (CSRC) issued a revised “Securities Company Classification Evaluation Rules”, updating the previous 201X framework. The revision aligns with policy directives from the 20th Central Committee's Third Plenary Session, the Central Financial Work Conference, and State Council guidance on strengthening supervision, improving institutional incentives, and supporting differentiated development among small and medium-sized securities firms.

Key changes include:

• Functionality Focus: The evaluation framework now emphasizes risk management capability, ongoing compliance, business development, and functional contribution. Incentive points for key business lines are expanded, encouraging firms to enhance professional services, especially in wealth management and long-term capital mobilization.

• High-Quality Development Guidance: The rules aim to steer securities companies toward high-quality growth, enabling smaller institutions to explore differentiated strategies based on their strengths.

• Enhanced Punitive Measures: The updated rules refine the scope of penalties for severe misconduct, adjusting disciplinary point deductions under the principle of proportionality, strengthening deterrence against major violations.

• Special Cases Handling: Companies that proactively cooperate with enforcement actions or implement early compensation measures may receive partial mitigation in scoring, reflecting a nuanced approach to regulatory compliance.

The CSRC emphasizes that the revised framework seeks to maintain the overall stability of the classification system while providing targeted enhancements to governance, reporting efficiency, and industry coordination. For international investors and partners, this framework clarifies operational standards and supports predictability in compliance and risk management.

The CSRC has also released “Interim Provisions on Internet Marketing by Futures Companies”, effective October 9, 2025, to regulate online promotional activities of futures brokers and trading advisory services. The regulations aim to protect market participants' rights and prevent unfair or misleading practices.

Key provisions include:

• Content and Conduct Standards: Marketing must be honest, transparent, and compliant, with clear company identification and risk disclosures. Unauthorized or unverified content, exaggerated returns claims, or misleading guarantees of safety or profitability are prohibited.

• Third-Party Management: Futures companies must assess and contractually govern third-party service providers, preventing illegal or non-compliant activity and ensuring accountability for marketing actions. Fee structures tied to trading volumes, client acquisition, or account openings are explicitly prohibited.

• Monitoring and Record-Keeping: Firms must maintain full records of marketing activity for at least 20 years, track client interactions, and report any irregularities to regulatory authorities. Supervisory bodies, including the CSRC, the Futures Association of China, and the Futures Market Monitoring Center, are empowered to monitor and share relevant information.

• Client Protection: The rules reinforce suitability obligations, risk disclosure, and ongoing client education, particularly regarding trading behaviors and unusual activity patterns.

These measures clarify boundaries for futures firms’ online activities and provide a structured framework for digital client engagement, which is increasingly relevant for cross-border brokers, institutional investors, and fintech service providers collaborating with Chinese futures firms.

For international banks, asset managers, and trading service providers, the revised securities classification rules and futures marketing provisions offer several practical benefits:

• Predictable Compliance Environment: Clear criteria for classification and marketing conduct reduce operational uncertainty.

• Enhanced Risk Management: Functional and punitive frameworks provide a transparent view of regulatory expectations, aiding internal governance.

• Market Access and Collaboration: Smaller or specialized institutions can leverage differentiated incentives and guidance to identify partnership opportunities in China's securities and futures markets.

Collectively, these updates signal China's commitment to modernizing its financial regulatory framework, balancing market openness with robust oversight, and promoting high-quality growth across financial institutions.