The Securities Association of China (SAC) announced on August 7 that it has formulated the "Management Rules for Securities Companies' Bond Investment Advisory Business" (hereinafter referred to as the "Management Rules") to strengthen self-regulation of this business line. The rules aim to standardize the conduct and service methods of bond investment advisors, and to prevent conflicts of interest and operational risks between bond advisory services and related business activities. Approved by the SAC's Eighth Council at its fourth meeting and filed with the China Securities Regulatory Commission (CSRC), the Management Rules are now officially released, with a six-month transition period before taking effect on February 5, 2027.
The Management Rules are structured into six chapters (General Provisions, Business Management, Risk and Compliance Management, Personnel Management, Self-Regulation, and Supplementary Provisions) containing a total of 44 articles. Key content includes: Chapter 1: General Provisions (6 articles) covering the basis for formulation, scope of application, conditions for business operation, fundamental principles, and boundaries for business conduct. Chapter 2: Business Management (19 articles) detailing the full-process business management rules for bond advisory services, including client suitability assessment, client due diligence, promotional activities, agreement signing, service provision, client follow-up, and complaint handling. Chapter 3: Risk and Compliance Management (10 articles) primarily integrates bond advisory business into the overall risk management framework, with specific requirements on conflict of interest management, responsible personnel segregation, system management, concentration limits, deviation management, internal inspections, and record keeping. Chapter 4: Personnel Management (4 articles) sets requirements for personnel qualifications, information disclosure, performance appraisal, and prohibited behaviors. Chapter 5: Self-Regulation (3 articles) clarifies the responsibilities for self-regulation, the subjects and objects of self-regulatory inspections, and associated measures. Chapter 6: Supplementary Provisions (2 articles) specifies the interpreting body and the effective date.
Full Text of the Notice on Issuing the Management Rules
To strengthen self-regulation of securities companies' bond investment advisory business, standardize the conduct and service methods of bond advisors, and prevent conflicts of interest and operational risks, the Securities Association of China has formulated the "Management Rules." These rules were approved by the Eighth Council's fourth meeting, filed with the CSRC, and are hereby issued. The Management Rules will have a six-month transition period and become effective on February 5, 2027.
Chapter 1: General Provisions
Article 1: These rules are formulated to standardize bond investment advisory activities, protect the legitimate rights and interests of investors, maintain capital market order, and are based on relevant laws, regulations, and regulatory rules, including the "Securities Law of the People's Republic of China," the "Interim Measures for the Administration of Securities and Futures Investment Consulting," and the "Notice on Regulating Bond Trading Activities of Bond Market Participants."
Article 2: These rules apply to securities companies providing investment advice on bonds (including both primary and secondary market trading) as part of their securities investment advisory services. Asset management subsidiaries of securities companies providing bond investment advice to products managed by other securities and futures institutions or other private securities investment funds shall refer to these rules for implementation.
Article 3: Securities companies conducting bond investment advisory business must meet the following conditions: (1) hold a securities investment consulting business license; (2) establish effective internal control and management systems; (3) staff the business department with sufficient professionals, ensuring expertise matches the service model and business scale, including at least 3 full-time bond advisory personnel with over 2 years of bond research/trading experience and at least 1 compliance officer with over 2 years of bond trading compliance experience; (4) implement an information technology management system for bond advisory business with full-process traceability, including business approval, element entry, risk monitoring, and compliance review functions; and (5) meet other necessary conditions for business operation.
Article 4: Securities companies and their personnel must comply with regulatory rules, adhere to the principles of good faith, and act diligently and prudently when providing advisory services.
Article 5: Securities companies and their personnel must fulfill fiduciary duties, prevent conflicts of interest, strengthen compliance management, and protect client interests. They must not harm clients for the benefit of the company, its affiliates, or the advisors themselves, nor favor one client over another.
Article 6: Bond advisory business is limited to providing investment advice and assisting clients in decision-making. Advisors must not accept client funds/assets for management, control client accounts, or make investment decisions on behalf of clients.
Chapter 2: Business Management
Article 7: Securities companies must establish management systems covering all aspects of the bond advisory business process, including client admission, business promotion, agreement signing, service provision, client follow-up, and complaint handling, and ensure these systems operate effectively.
Article 8: Clients for bond advisory services must be investors as defined in Article 8, Items 1-4 of the "Measures for the Suitability Management of Securities and Futures Investors," or professional institutional investors converted from ordinary investors under Article 11.
Article 9: Securities companies must conduct thorough due diligence to understand client situations, using necessary measures like requesting supporting documents and querying public information to verify client suitability.
Article 10: Securities companies must strictly regulate marketing and promotional activities, enhance information disclosure, fully disclose risks, and protect clients' legitimate rights, strictly prohibiting misleading or fraudulent conduct. Promotional activities must not: (1) make false, misleading, or exaggerated claims about service capabilities or past performance, or conceal advisory risks; (2) promise or imply guaranteed principal or returns; or (3) engage in other illegal activities.
Article 11: When providing advisory services, securities companies must inform clients of: (1) company name, address, contact details, complaint hotline, and securities investment consulting qualification; (2) names, registration codes, departments, and positions of advisory personnel; (3) content and methods of advisory services; and (4) that investment decisions are made by the client, not the advisor. This information must also be published on the company's website for client reference.
Article 12: Securities companies must sign a bond advisory service agreement with clients, managed by serial number. The agreement must include: rights and obligations; service content and methods; investment scope and restrictions; advisor duties and prohibited behaviors; disclosure and management of conflicts of interest; fee rates and payment methods; names and registration codes of advisors, with notification obligations for changes; dispute resolution methods; and conditions for termination. If services include bond trading inquiry, this must be specified in the agreement.
Article 13: Securities companies must comply with regulatory rules and the advisory agreement, with reasonable research basis for investment advice, which may include market analysis, industry research, credit ratings, securities research reports, or analytical models.
Article 14: Securities companies must establish a bond product library for investment advice, conducting necessary due diligence and internal credit ratings on recommended bonds, and continuously monitoring credit and liquidity risks. A graded approval mechanism and differentiated credit tracking system should be established for bonds of different risk levels.
Article 15: Securities companies must conduct due diligence on counterparties for reverse repos, forwards, and lending transactions, and establish a whitelist system updated at least annually. If advice includes counterparty recommendations, the counterparty must meet these requirements.
Article 16: When providing bond trading inquiry services, securities companies must comply with the advisory agreement on investment scope and restrictions. Personnel must disclose their advisory role to inquiry counterparts and use company-assigned inquiry tools to ensure full traceability of records.
Article 17: Securities companies must establish a graded approval mechanism for investment advice, with clear approval requirements and documented content, and use the management system for approval and traceability.
Article 18: Securities companies must send the investment advice letter to the client on the day of approval. The letter must be signed by two securities professionals, at least one of whom is registered as a securities investment advisor who is responsible for the advice. Clients have the right to reject advice, and companies must not require explanations for such rejection.
Article 19: Securities companies must provide a risk disclosure statement to clients, signed as acknowledgment, explaining key risks of bond advisory services and stating that clients bear their own investment risks.
Article 20: Advisory personnel must promptly follow up with clients on the execution of adopted advice and record trading elements in the management system.
Article 21: Securities companies must not use fee structures that may create conflicts of interest. Fees should be mutually agreed upon in writing, collected via company accounts, not by individual advisors.
Article 22: Securities companies must designate personnel independent of advisory services to conduct at least annual client follow-up visits, covering at least 50% of clients from the previous year. Follow-up must include investor suitability matching and client satisfaction. Clients must truthfully report whether they made independent decisions and whether advisors engaged in prohibited activities like operating accounts or promising returns.
Article 23: Follow-ups can be conducted via on-site visits, phone calls, or questionnaires. On-site/phone follow-ups must be recorded, and questionnaire follow-ups require client signatures or seals.
Article 24: Responsible departments must record follow-up results. If illegal activities are suspected, they must report to the company's compliance department. If major illegal activities are found, securities companies must report to the relevant local CSRC office.
Article 25: Securities companies must establish a complaint handling mechanism, with designated personnel independent of advisory services to handle complaints promptly and properly.
Chapter 3: Risk and Compliance Management
Article 26: Securities companies must integrate bond advisory business into their overall risk management system, with a risk management mechanism commensurate with business scale, ensuring prudent operations and effective risk control.
Article 27: Securities companies must establish robust conflict of interest identification and management mechanisms, promptly identifying conflicts between bond underwriting, proprietary trading, asset management, and advisory businesses. A dedicated business department or sub-department should be established for advisory services, independent of underwriting, proprietary trading, and asset management in terms of personnel, system permissions, and office space. The advisory department must establish information barriers per relevant guidelines.
Article 28: The head of the advisory department must not simultaneously head departments with obvious conflicts of interest. Senior executives overseeing both proprietary trading, asset management, and advisory services must not directly or indirectly participate in investment decisions in specific securities that could lead to conflicts. Discussion meetings for proprietary trading, asset management, and advisory services must be held independently to prevent information leakage.
Article 29: The advisory management system must trace the approval, issuance, and risk monitoring of investment advice, with system permissions set based on job responsibilities to ensure effective segregation.
Article 30: If investment advice includes counterparty recommendations, the counterparty must not be the company's proprietary account, other advisory accounts, or asset management accounts managed by the company or its subsidiaries, unless effective isolation and fair pricing are proven. Securities companies must not advise clients to invest in bonds issued by the company. If advising on bonds underwritten by the company, a robust internal approval and evaluation mechanism must be established, prioritizing client interests, with prior client consent and effective measures to protect client rights. If a company acts as both investment advisor and distributor for the same financial product, distribution and advisory services must be strictly segregated, with the product manager exercising active management duties and the company establishing a clear internal control mechanism covering pre-assessment, ongoing monitoring, and post-event review.
Article 31: Securities companies must monitor trading inquiries and client-executed trades based on advice, using factors like bond type, price deviation, recommended quantity, and date to monitor transactions between advisory accounts and proprietary/asset management accounts, preventing tunneling, conflicts, and risk transmission.
Article 32: Securities companies must monitor concentration risk. As a general rule, advice must not cause a single advisory account's investment in the same bond (at cost) to exceed 25% of the account's asset size, except for: (1) government bonds, central bank bills, policy bank bonds, local government bonds, or domestic systemically important bank CDs; (2) the first three months of service; or (3) passive breaches due to bond put options or list adjustments. In such cases, companies must not issue further advice to buy the exceeded bond and must advise orderly reduction of the position.
Article 33: If advice includes pricing, securities companies must monitor deviation from market fair value on the trading day. If the suggested price deviates significantly from market levels, advisors must file with the internal control department and provide justification. Market fair value and deviation metrics follow the "Internal Control Guidelines for Bond Investment Trading of Securities and Fund Institutions."
Article 34: Securities companies must designate an independent department as the internal control department to periodically sample advisory projects, inspecting all business links and conducting fair trading checks between advisory accounts and proprietary/asset management accounts. They must investigate potential compliance issues, propose corrective actions, and ensure implementation.
Article 35: Securities companies must properly preserve all advisory business records for at least five years from the termination of the agreement, in written or electronic form. Records include: agreements, approval workflows, timing/content/basis of advice letters, client suitability materials and follow-up records, system data, and other materials related to business compliance.
Chapter 4: Personnel Management
Article 36: Advisory personnel include those issuing investment advice (registered as securities investment advisors), those involved in bond trading inquiries, and those providing substantive advice on bond type, price, or quantity. Personnel issuing investment advice must be registered as securities investment advisors. Those involved in trading inquiries must hold relevant qualifications.
Article 37: Securities companies must disclose advisory personnel information on the company and SAC websites per regulatory rules. Upon resignation, departure information must be published within two working days, with a display period of at least one month.
Article 38: Securities companies must establish a scientific performance appraisal system, focusing on compliance and client satisfaction. Failure to exercise diligence or prudence leading to significant client losses or complaints must be included in performance assessments, and client excess returns must not be used as a direct performance indicator.
Article 39: Securities companies and their personnel must not: (1) accept client funds/assets, operate client accounts, or make investment decisions for clients; (2) privately accept client mandates under personal names or aliases; (3) use information, capital, or bond holdings to influence prices or volumes; (4) recommend unnecessary transactions for commissions or other gains; (5) provide liquidity support services; (6) issue advice per client or third-party instructions to circumvent regulations; (7) engage in unfair trading, tunneling, or regulatory evasion; (8) accept gifts or benefits that could compromise objectivity; or (9) engage in other activities to transfer or seek improper gains.
Chapter 5: Self-Regulation
Article 40: The SAC implements self-regulation over securities companies' bond advisory business. Violations of these rules or SAC self-regulatory rules may result in self-regulatory measures or disciplinary actions per the "Measures for the Implementation of Self-Regulatory Measures of the Securities Association of China."
Article 41: The SAC may conduct on-site or off-site inspections of securities companies' bond advisory business. Companies and their personnel must cooperate, providing required documents and information and accepting inquiries.
Article 42: If securities companies or their personnel engage in bond advisory activities suspected of violating regulatory rules or posing serious risks, the SAC will refer the matter to the CSRC or other relevant authorities.
Chapter 6: Supplementary Provisions
Article 43: These rules are interpreted by the Securities Association of China.
Article 44: These rules take effect on February 5, 2027.
Explanation of the Drafting of the Management Rules
To strengthen self-regulation of securities companies' bond investment advisory business, standardize conduct and service methods, and prevent conflicts of interest and operational risks, the SAC, guided by the CSRC, studied industry experience and formulated these Management Rules. The background is the rapid growth of bond advisory business, with a focus on preventing risks, strengthening regulation, and promoting high-quality development. The drafting aims to enhance business segregation, fair trading, and information disclosure among bond advisory, trading, and underwriting activities, and to establish clear requirements for business boundaries, management, internal control, personnel, and self-regulation to promote compliance and risk prevention.
The drafting approach is guided by: (1) emphasizing the political and people-oriented nature of financial work, urging companies to prioritize functional roles and fiduciary duties; (2) fostering an industry ecosystem of compliance, integrity, professionalism, and stability through a "three-in-one" approach covering institutions, business, and personnel; (3) addressing current industry pain points and challenges by listening to the industry and summarizing best practices; and (4) promoting technological innovation in financial services to enhance digital management and self-regulatory efficiency.
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