"The Securities Law was revised in 2019, and more than six years have passed since then. The capital market has undergone profound and fundamental changes over this period. Based on thorough assessment, the CSRC will explore and advance including the revision of the Securities Law in the legislative agenda of the next National People’s Congress," said Cheng Hehong, Chief Lawyer of the China Securities Regulatory Commission (CSRC), at the 2026 Financial Street Forum Annual Conference on October 20.

Cheng Hehong elaborated on eight dimensions for deepening financial rule of law and fostering high-quality development of the capital market: scientifically building a modern financial legal system with the Financial Law as its basic law; promptly amending and refining supporting special financial laws; further improving the special representative litigation system for securities-related civil cases; duly applying general provisions, enabling clauses, catch-all clauses and provisos under relevant laws; strictly enforcing joint and several liability of intermediaries in civil tort cases involving securities misrepresentation; actively advancing the securities advance compensation regime; strengthening coordination between financial regulation and financial judicature; and thoroughly researching and exploring the establishment of a legal system for securities civil public-interest litigation.

He noted that the Securities Investment Fund Law was revised in 2012, and many of its institutional provisions no longer fit current practical needs and policy requirements, calling for prompt refinement. Revision of the Securities Investment Fund Law is also included in the arrangements under the new State Council Nine-Point Guidelines for the capital market.

"Following research and assessment, the CSRC has submitted legislative proposals on revising the Securities Investment Fund Law to relevant authorities," Cheng Hehong stated.

In Cheng’s view, Article 89 of the first reading draft of the Financial Law, drawing on experience with special representative litigation and responding to practical demands, explicitly stipulates that "investors and investor protection institutions may, in accordance with relevant laws, file lawsuits on behalf of other investors holding claims of the same type of subject matter. Judgments and rulings rendered by people’s courts shall apply to the plaintiff and all investors represented thereby, except those who explicitly opt out of or withdraw from the proceedings." This provision further expands the scope of eligible subjects to initiate special representative litigation. It carries great practical significance for better safeguarding investors’ legitimate rights and interests, resolving securities market disputes in a more economical and efficient manner, and maintaining market and social stability.

Cheng Hehong stressed that relevant statutory general provisions, enabling clauses, catch-all clauses and provisos should be applied in accordance with law to enhance the inclusiveness and adaptability of financial legal rules in implementation.

First, make good use of general statutory provisions, especially those "principles laid down in statutory text", in a prudent and steady manner.

Second, leverage enabling clauses. For matters not ripe for legislation or subject to frequent changes and thus unsuitable for statutory codification, laws often delegate rulemaking power via enabling clauses to administrative regulations and ministerial rules. Where such enabling provisions exist, the CSRC will faithfully implement them, push forward the formulation and revision of relevant administrative regulations and rules, and provide timely institutional basis for market activities and regulatory law enforcement.

Third, apply catch-all clauses properly. On the one hand, the CSRC will work with relevant authorities to operationalize these catch-all clauses through judicial interpretations, administrative regulations and ministerial rules by specifying applicable conditions, scenarios and the scope of business types. On the other hand, in individual cases, such clauses will be interpreted and applied strictly and cautiously through established working mechanisms, consistent with the spirit and rationale of the conditions and scenarios set out therein.

Fourth, resort to provisos to exclude the application of general rules under specific circumstances, and avoid a one-size-fits-all outcome stemming from mechanical enforcement.

Cheng Hehong said joint and several liability of intermediaries in civil tort cases arising from securities misrepresentation must be strictly enforced to give play to the gatekeeper function of intermediaries.

He explained that this regime represents a legislative arrangement developed through repeated research, grounded in China’s national realities, drawing on international practices and soliciting opinions from all stakeholders. It remains a valid statutory provision and must be rigorously followed in practice. This rule, designed to protect investors and compel intermediaries to perform their duties with due diligence, should not be distorted into several or proportional liability, which would weaken investor protection and dilute intermediaries’ gatekeeper obligations. While upholding the statutory joint and several liability rule, intermediary industries should further sum up experience, improve practice standards for due diligence, and refine specific verification procedures, so as to lay a solid legal foundation for intermediaries that act in good faith and exercise due diligence to obtain fair exemption or mitigation of liability.

In addition, Cheng Hehong mentioned that the CSRC will actively cooperate with relevant authorities to conduct in-depth research and exploration, and strive to advance the establishment of a securities civil public-interest litigation system with Chinese characteristics at an early date. The new institutional arrangement will support procuratorial organs in fully performing their functions, better protect the legitimate rights and interests of small and medium-sized investors, and underpin high-quality development of the capital market.

Source: Shanghai Securities News