Background

The CMA, empowered by Articles 5 and 6 of the Capital Market Law, is the authoritative body responsible for regulating, developing, and supervising the capital market. This includes issuing necessary licenses and setting minimum capital and financial guarantee requirements for brokerage companies.

Objectives and Rationale of the Draft Amendments

The proposed amendments are designed to align with international best practices, particularly concerning minimum capital and legal structure requirements for brokerage companies. The amendments aim to foster competition, reduce service costs, encourage asset management industry growth, and allow CMA to swiftly adapt to market changes, including the introduction of new financial products and services.

The CMA has looked towards several jurisdictions for benchmarking, including the United Kingdom, the United States of America, Australia, the Republic of Singapore, Turkey, the United Arab Emirates, and Malaysia.

Main Elements of the Draft Amendments

A significant change includes moving away from specifying the legal structure and minimum capital requirements for brokerage companies in the law itself. Instead, these determinations will be shifted to the implementing regulations, offering flexibility based on the business nature and market needs. The amendments primarily affect applicants for authorization to carry out dealing and custody business and existing capital market institutions authorized for such activities.

Proposed Provision Changes:

• Article 32 of the Capital Market Law: The definition of a broker will no longer specify the need to be a joint-stock company, broadening the potential legal structures for brokerage firms.
• Article 33 of the Capital Market Law: The Implementing Regulations will detail the requirements for obtaining a brokerage license, including competence, integrity, and minimum capital requirements, without specifying a fixed minimum capital threshold.