SHANGHAI The Securities Association of China (SAC) has told brokerages to strengthen their risk administration regimes to embrace reputation risk, SAC stated in a press release on its official web site late Friday.

The modifications come at a delicate time for the brokerage business. Sealand Securities Co Ltd (000750.SZ) has been embroiled in a $2.four billion bond scandal that raised fears of a banking system liquidity crunch earlier than regulators stepped in.

Brokerages now should embrace subsidiaries of their risk-management framework, and will forestall reputational hazards from turning into liquidity dangers, the SAC stated in 4 revised guidelines revealed late on Friday.

Previously, brokerages’ risk-management techniques didn’t want to cowl their subsidiaries, and reputation risk was not included.

The objective of the rule replace, which covers areas together with liquidity risk and stress checks, was to “further promote brokerages’ risk-management awareness, help them improve their risk-management systems, and strengthen their ability to manage risks,” SAC stated in a press release on its web site.

Listed brokerages got a grace interval of six months, whereas non-listed securities companies have been required to implement the brand new guidelines by end-2017, the SAC assertion stated.

(Reporting by Samuel Shen and Engen Tham; Editing by Eric Meijer)



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