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SAC General Business Evaluation study materials
SAC General Business Evaluation study resources

SAC General Business Evaluation: Regulatory Framework and Securities Market Structure

SAC General Business Evaluation · Work through your exam, one topic at a time.

All guide sections

Regulatory Framework and Securities Market Structure

This domain tests who regulates China's securities market, how an offering gets to market, and how the trading venues differ in the parameters that show up in calculation questions. Most items hinge on one distinction: review by an exchange versus registration by the CSRC, and the board-specific numbers that follow from where a stock lists.

The rule-makers

  • The CSRC is the State Council's securities regulator: it writes rules, licenses firms and funds, and registers issuances. The SAC is a self-regulatory industry association, not a government agency - it sets practice standards and runs the practitioner exams.
  • Exchanges (SSE, SZSE, BSE) and China Securities Depository and Clearing (CSDC) are front-line self-regulatory organizations: they vet listings, monitor trading and clear and settle trades.
  • The Securities Law (revised 2019, effective 1 March 2020) introduced registration-based issuance, a dedicated investor-protection chapter, and much heavier sanctions - fraudulent issuance can draw a fine of 10%–100% of funds raised.

The market layers

  • SSE: main board plus the STAR Market. SZSE: main board plus ChiNext. BSE: innovative small and medium enterprises, largely upgraded from NEEQ Select. NEEQ (New Third Board) has innovation and base tiers below the exchange market.
  • Board parameters worth memorizing: main board ±10% daily limit (ST stocks ±5%), ChiNext and STAR ±20%, BSE ±30%. STAR buys start at 200 shares then increments of 1; main board and ChiNext buy in 100-share lots.

Worked example

A ChiNext stock closes at 25.00 yuan. What are tomorrow's limit prices, and how many shares can a client buy with 100,000 yuan at the upper limit?

Reasoning: ChiNext uses a 20% band, so upper = 25.00 × 1.20 = 30.00 and lower = 25.00 × 0.80 = 20.00, rounded to the 0.01 tick. At 30.00, one lot of 100 shares costs 3,000 yuan, so 100,000 ÷ 30.00 = 3,333 shares, rounded down to a whole 100-share lot = 3,300 shares. On the main board the same question would use a 10% band and produce 30.00... only by coincidence; do not assume the band, read the board.

Traps that cost marks

  • Treating registration as a CSRC guarantee of value. Registration shifts review to the exchange; investors still bear the risk.
  • Applying a 10% limit to STAR or ChiNext names, or 100-share lots to STAR.
  • Calling the SAC a regulator that grants licenses.
  • Forgetting that the BSE and NEEQ are different markets at different layers.