pc
nid 92183
Apr 24, 2026
pthandapani@vixio.com
China
China Securities Regulatory Commission
financial services
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1500 charsChina's Securities Regulatory Commission Launches Consultation on Administrative Penalty Illegal Gains Recognition Methodology
On April 17, 2026, the China Securities Regulatory Commission (CSRC) launched a public consultation on the draft Administrative Penalty Case Illegal Gains Recognition Methodology (draft methodology).
The draft methodology aims to standardise the recognition of illegal gains in securities and futures administrative penalty cases, and to supervise and ensure that securities regulatory institutions implement administrative penalties in accordance with the law. The CSRC developed the draft methodology in accordance with the Administrative Penalty Law of the People's Republic of China, the Securities Law of the People's Republic of China, and other relevant provisions, drawing on regulatory enforcement practice.
The draft methodology addresses how the CSRC will identify and quantify illegal gains in administrative penalty proceedings, establishing consistent standards and procedures for penalty determination across securities and futures enforcement actions. This development reflects the CSRC's commitment to enhancing regulatory transparency and ensuring consistent application of penalties across the securities industry.
Stakeholders can submit feedback through two channels: electronic mail to cfwzhc@csrc.gov.cn, or by post to the CSRC Penalty Committee Office, Fuyukai Building, 19 Financial Street, Xicheng District, Beijing, postal code 100033. The consultation period closes on May 17, 2026. The draft methodology and explanatory documentation are available on the CSRC website.
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2486 charsChina's Securities Regulatory Commission Launches Consultation on Administrative Penalty Calculations
The China Securities Regulatory Commission (CSRC) his seeking feedback on its draft measures for the determination of illegal gains in administrative penalty cases by the CSRC.
The draft measures prescribe:
Definition and general principles defining illegal gains as the benefits obtained or losses avoided through illegal securities and futures acts. It mandates that calculations must be objective, fair, and in accordance with market logic and common sense. For joint violations, the total benefit or avoided loss of the overall act is considered the illegal gain. Furthermore, profits and losses from separate, independent violations cannot be offset against each other.
Calculation of trading violations stipulating that illegal gains include price differences from buying/selling securities or contracts, dividends from illegally held securities, and other direct economic benefits. Deductible expenses include the cost of buying securities or opening contracts, as well as direct transaction taxes and fees like stamp duty and commissions. However, costs for borrowing funds or accounts, or expenses for equipment and personnel to commit the violation, cannot be deducted.
Cost matching and valuation methods detailing that the cost of illegally bought securities or opened contracts is matched on a first-in, first-out basis when sold or closed, except for insider trading, which uses a last-in, first-out method. The rules specify valuation methods for unsold securities based on average closing prices over five trading days following the opening of price limit boards (for insider trading), the end of market manipulation, or the end of other illegal acts.
Specific violation calculations outlining how to calculate gains or avoided losses for specific acts. Avoided losses in insider trading are calculated as the difference between the sale amount and a benchmark value based on post-disclosure prices. For securities transferred during a restricted period, the gain is the difference between the sale amount and the benchmark value on the first trading day after the restriction ends. The measures also cover illegal gains from trading on undisclosed information , illegal underwriting by brokerages, fabricating false information, and illegal acts by institutions and their personnel, such as illegally providing margin trading services or privately accepting client commissions.
Feedback may be submitted via post or by email to cfwzhc@csrc.gov.cn by May 17, 2026.