Appropriateness Management Measures | "Appropriate" New Words (I) Seek Truth from Facts
Editor's note: On July 1, 2017, the “Measures for the Administration of the Proper Suitability of Securities and Futures Investors” (hereinafter referred to as the “Measures”), which are important tools for the protection of the rights and interests of small and medium investors, are about to be implemented. What do investors, especially small and medium investors mean? That Xiao Bian talked about it in this article on seeking truth from facts.
Regarding the protection of investor rights and interests, President Xi pointed out that “the stock market that has a complete financing function, a solid foundation system, effective market supervision, and full protection of investors’ rights and interests is formed”.
As the "measures" of the "new regulations," investors have received extensive attention since their release.
As Mr. Gu Jiashu said, in the market, there are a wide range of securities and futures investment products, which are not only highly professional, but also have complicated legal relationships, and the characteristics of risk and return vary greatly.
For small and medium-sized investors, due to the relatively weak aspects of professional investment knowledge, risk identification and risk tolerance, legal rights are vulnerable.
The "Measures" have strengthened the management of the appropriateness of management organizations and have clearly defined the institutional arrangements for the provision of appropriate products or services to appropriate investors. To a certain extent, it helps to prevent investors from being exposed to inappropriate investment risks. In this way, the "Measures" are conducive to protecting the legitimate rights and interests of small and medium-sized investors. At the same time, they are also the actual needs of adapting to the characteristics of investors in China and strengthening investor protection.
Looking beyond the borders, appropriate management is a system gradually established and perfected according to the practical problems of investor protection in mature markets such as the United States, the European Union, and Japan. It has now become a common practice and basic principle of international capital markets.
In 2008, a "Lehman mini-bond" storm broke out in Hong Kong. At the time, many individual investors who lacked professional risk identification capabilities bought high-risk "Lehman minibonds" because of "inappropriate" sales practices of the operating agencies, and faced the risk of capital loss.
This storm has made us more clearly realize that, when operating institutions sell products or provide services to investors, they should understand the situation of investors, assess whether investors are aware of investment risks, and whether they are suitable to participate in investment. The suitability assessment arrangements mentioned here are designed to confirm whether investors are suitable to invest in a product or business.
In a word, investment has to pay attention to seeking truth from facts and seeking "appropriateness"!
Perhaps investors also understand that, in recent years, there have been regulations on the appropriateness of management when introducing margin financing, Hong Kong Stock Connect, stock options, and bonds in our markets. Under this background, the "Measures" introduced unified management regulations for various markets and businesses before, and further improved the institutional system for the protection of investors' rights and interests, which is more conducive to promoting stable and healthy development of the capital market. The investor rights protection system in our market is more solid and complete.
Specifically, the "Measures" mainly stipulates the protection of investors' rights and interests from the following aspects. In the follow-up essay, we introduce the investors one by one.
Disclaimer: The above information does not constitute any investment advice, investors should not use this information to replace their independent judgment or make decisions based on such information alone. Shanghai Dingfeng Asset Management Co., Ltd. strives to be accurate and reliable, but it does not guarantee the accuracy or completeness of this information, nor does it assume any responsibility for the losses caused or likely to arise from the use of such information.