PRC Financial Regulation Annual Report (2026) Securities and Futures

I. 2025 Regulatory Milestones

February 7

The China Securities Regulatory Commission (CSRC) issued the Implementation Opinions on the Capital Market’s Role in Advancing the “Five Key Areas” of Finance, focusing on serving new quality productive forces and the real economy.

May 16

The CSRC amended the Measures for the Administration of Material Asset Restructurings of Listed Companies, deepening reform of the M&A and restructuring regime for listed companies.

June 13

The CSRC issued the Administrative Provisions on Program Trading in the Futures Market (Trial), bringing program trading in the futures market under unified regulation.

June 18

The STAR Market introduced a Growth Tier, enhancing the inclusiveness and adaptability of the listing regime for high-quality technology companies. The first three newly registered issuers were listed on October 28.

August 8

The Shanghai Futures Exchange (SHFE) released the international version of its business rules, establishing an all-inclusive regulatory framework aligned with international standards.

August & September — The CSRC revised the rules on classification and evaluation of securities companies and futures companies, revamping the focus of evaluations and strengthening compliance and risk management requirements in the respective industries, so as to guide firms toward core business focus and segmented, high-quality development.

September 5

The change of shareholding of Qiankun Futures was approved, making it the fourth wholly foreign-owned futures company.

September 26

The People’s Bank of China (PBOC), the CSRC, and the State Administration of Foreign Exchange (SAFE) introduced measures to support overseas institutional investors able to conduct spot bond trading in China’s bond market in conducting bond repurchase (repo) transactions, further advancing standards and liberalization in the bond market.

September 30

The CSRC approved the establishment of Mizuho Securities (China) Co., Ltd., the first Japanese wholly owned securities firm approved to be set up in China.

October 27

The CSRC officially launched the Work Plan to Improve the Qualified Foreign Investor (QFI) Regime, improving institutional design and facilitating investment operations to further enhance the attractiveness of China’s onshore capital market to foreign investors.

November 19

China International Capital Corporation Limited (CICC) announced that it intends to simultaneously absorb and merge with Dongxing Securities and Cinda Securities, reshaping industry dynamics and building a first-class investment bank.

December 5

The CSRC released the Regulation on the Supervision and Administration of Listed Companies for public consultation. As the first special purpose regulation for the supervision of listed companies, the Regulation aims to strengthen the foundation of high-quality market development through all-inclusive regulation.

II. 2025 Regulatory Review

1. Continuing to Implement the New “Nine Guidelines” and Improve the“1+N”Policy Framework

In 2025, the CSRC’s regulatory work closely followed the overarching themes of preventing risks, strengthening regulation, andpromoting high-quality development. With a focus on key areas including issuance and listing, cash dividends, information disclosure, M&A and restructurings, delisting, shareholding reductions, the entry of medium- and long-term capital into the market, and regulation of program trading, the CSRC together with relevant authorities drafted and updated a series of headline policy documents and regulatory rules. These measures translated the top-level design of the Several Opinions of the State Council on Strengthening Regulation, Preventing Risks, and Promoting the High-Quality

Development of the Capital Market(the new “Nine Guidelines”) into concrete regulatory practice, pushing the continuous improvement of the “1+N” policy framework.

Close implementation and step-by-step improvement of these policies and rules enabled the capital market to serve the real economy and attract medium- and long-term capital and foreign investment in a more stable, transparent and predictable manner, and strengthened the regulatory basis for innovation and compliant operation in the market.

2. Multiple Measures Boost Sophistication of the Securities Sector, while Classification-Based Regulation Supports the Tiered Ecosystem

In 2025, the CSRC continued to drive the securities industry to pursue quality rather than scale, focusing on strengthening functional effectiveness, professional service capabilities, compliance and risk management, and international competitiveness.

The regulatory focus on building leading investment banks and investment institutions resulted in support for leading securities firms to enhance their competitiveness through M&A, restructuring and organizational innovation. 2025 thus saw several mergers in the industry. The proposed merger of Xiangcai Securities with Dazhihui entered the regulatory review phase. Preliminary merger proposals for China International Capital Corporation Limited (CICC) to merge with Cinda Securities and Dongxing Securities were disclosed at the end of 2025. Earlier transactions including Guotai Junan Securities - Haitong Securities and Guolian Securities - Minsheng Securities were completed, which initially demonstrated the pioneering effect. We expect to see more M&As in the securities sector to achieve the goal of two or three globally competitive investment banks and investment institutions by 2035.

On the other hand, regulators clarified that not only a large firm can become a “leading investment bank”. Small and medium-sized securities firms were encouraged to pursue segmented development and specialized operations. In August, the CSRC issued the revised Provisions on the Evaluation and Classification of Securities Companies, which strengthen the principle of classification-based regulation. For example, bonus points for total revenue rankings and duplicative scale-related points were removed, while weightings of functional performance, compliance and risk controls and operating efficiency were increased. In addition, scoring for niche business segments was expanded, guiding small and medium-sized firms toward segmented and specialized development. A securities firm’s classification is directly linked to its license applications, risk control indicator thresholds, and regulatory resources. The revised Provisions thus guide small and medium-sized firms to specialize in niche areas based on their comparative advantages, reduce redundant expansion and “me-too” competition and ease inefficient “involutionary” competition.

3. Continuous Improvement of Futures Industry Regulatory Framework; Quality Improves Through Coordinated Administrative Regulation and Self-Regulatory Management

2025 saw key initiatives beginning at the top-level of policy-making to “promote the high-quality development of the futures market”. The CSRC, in coordination with the China Futures Association (CFA), made methodical improvements to the regulatory framework that integrate administrative regulation with self-regulatory management which are aimed to promote stable and quality-oriented development of the futures industry.

Both the new “Nine Guidelines” and the Guidance of the China Securities Regulatory Commission and Other Departments on Strengthening Regulation, Preventing Risks and Promoting the High-Quality Development of the Futures Market which prescribe detailed requirements for implementing the new “Nine Guidelines” in the futures sector (the “Futures Market Guidance”), set out growth objectives for the futures market, including continuously enhancing intermediaries’ holistic strength and international competitiveness. To further these objectives, the CSRC made revisions to the Provisions on the Categorized Evaluation of Futures Companies which repackaged high-level requirements into improved regulatory standards. The revisions include standardizing and refining the point-addition/deduction framework, incentives for servicing industrial and institutional clients and emphasis on compliance and risk controls and serving the real economy, which together assign to the classification- evaluation mechanism a more precise guidance role.

In parallel, the CFA continued to perform a self-regulatory “gap-filling” function and strengthened self-regulatory oversight of futures companies and their subsidiaries. The CFA issued new self-regulatory standards in key aspects and problem areas that previously lacked regulation, laying the policy foundation to plug the regulatory gap. For example, in December, the CFA released for public consultation the Rules on the Management of Futures Companies’ Access to External Information Systems (the “Consultation Draft”), providing comprehensive self-regulatory standards to manage futures companies’ access to external information systems. The Consultation Draft is a key implementing measure of the “Futures Market Guidance” and the Measures for the Supervision and Administration of Futures Companies. The Consultation Draft also expresses, without compromising strict compliance and safety requirements for system access, regulators’ desire to accommodate traders’ reasonable trading management requirements. In market hot-spots such as brokerage business, issuance of futures research reports and online marketing, the CFA has further conducted targeted research and drafted relevant business standards for public consultation, thus using the forward-looking and flexible qualities of self-regulation to timely control operational risks.

4. Continuing to Fortify Regulation of Program Trading in Securities and Futures Markets Through All-Inclusive, Full-Process Regulation

The growth of program trading in securities and futures markets has increased its impact on market stability, fair trading and risk prevention. In 2025, regulators implemented and strengthened their oversight of program trading across securities and futures markets by implementing and improving relevant rules in line with the Securities Law and the Futures and Derivatives Law.

The basic regulatory framework for securities market was gradually rolled out during 2023-2024. In 2025, detailed implementation rules were adopted by the three stock exchanges, taking effect on July 7. These rules further define qualitative standards for the four categories of abnormal program trading in the stock market. Matching quantitative monitoring indicators have been trialed since April 2024. To address cross-border trading risks posed by overseas participants, the SSE and SZSE issued guidelines in July covering Northbound investors under the Stock Connect regime, which impose program trading reporting requirements in accordance with the principle of equal treatment of domestic and foreign investors to safeguard market fairness.

In the futures market, the CSRC issued the Administrative Provisions on Program Trading in the Futures Market (Trial) in June, filling a gap in departmental rules. The Provisions clarify core issues including definitions, reporting, trading system access and co-location, and strengthen oversight of high-frequency trading, reflecting a whole-process approach to regulation. In August, the futures exchanges released supporting measures and guidance, implementing the requirement of “reporting before trade”. After the transition period, traders who fail to report as required will not be allowed to conduct program trading. Futures brokers are to sign specific engagement agreements with their clients, which shall define relevant program trading reporting and risk control obligations. In September, the CFA published mandatory clauses for such engagement agreements. Regarding cross-border elements, the CFA revised its futures brokerage contract guidelines in October to define rights and obligations, reporting management obligations and risk-control requirements for overseas brokerage institutions engaging in program trading ofinternational futures products listed on China’s domestic futures market through domestic futures companies.

5. STAR Market Reforms and the Bond Market’s Sci-Tech Board Jointly Strengthen Innovation in Technology Finance

In 2025, the CSRC, strictly adhering to the technology finance requirements of the “Five Key Areas”, focused on the funding needs of technology and innovative enterprises. The STAR Market, as the core platform by which the capital market serves hard-tech companies, stepped up reform to make policies more accommodative and unblock direct financing channels, thereby supporting technological innovation in order to catalyze high-quality development. The parallel launch of the bond market’s “Sci-Tech Board” has broadened diversified financing channels for technology enterprises and supported the cultivation of new quality productive forces.

In June, the CSRC released the Opinions on Establishing a STAR Market Growth Tier to Enhance Policy Accommodativeness and Adaptability, which established the STAR Market Growth Tier and resumed acceptance of start-up enterprises listing on the STAR Market under the Fifth Set of Listing Standards. At the same time, to enhance policy accommodativeness and adaptability for high-quality technology companies, the CSRC introduced six reform measures, marking the formal implementation of the STAR Market “1+6” reform package. The core of the package is a differentiated policy subset for start-up tech enterprises that have not yet achieved profitability but have high growth potential, which employs precise segmentation to provide more targeted capital-market support for high-quality technology enterprises at critical growth stages.

In July, the Shanghai Stock Exchange (SSE) issued supporting rules and business guidelines including the Guidelines for the STAR Market Growth Tier, whose provisions cover, among other matters, inclusion and removal criteria, and information and risk disclosure. The reform used a “new–old divide” approach to ensure prudent implementation, and on the same day as it was adopted, 32 existing start-up issuers were admitted into the STAR Market Growth Tier. In October, the Growth Tier welcomed its first three newly registered issuers for listing. The “1+6” reform package was seen to materialize at a faster pace than the traditional tier, providing a more tailored policy framework for technology enterprises financing through practical and precise segmentation.

Turning to the bond market, in May, the PBOC and the CSRC jointly issued the Announcement on Measures for Supporting the Issuance of Sci-Tech Innovation Bonds, innovatively launching the bond market’s “Sci-Tech Board”. The initiative supports three categories of issuers—financial institutions, technology enterprises, and private equity/venture capital institutions—in issuing sci-tech innovation bonds, with proceeds to be used to support investment and financing in technology innovation. Other supporting mechanisms and enhancements to the product system were introduced in parallel. The bond market’s “Sci-Tech Board” has effectively reduced financing costs in the technology innovation sector, and also helped establish an integrated equity & debt platform with technology innovation bonds as the anchor product, precisely matching the full life-cycle and diversified financing needs of technology enterprises.

6. Bond Market Business Rules Updated to Enhance the Policy Framework from All Angles

In 2025, stock exchanges and the National Association of Financial Market Institutional Investors (“NAFMII”) jointly updated their business rules across key stages of bond-market activity including issuance, valuation, and investment advisory services, contributing to the continuous improvement of the bond market’s policy framework.

In the exchange-traded bond markets, the SSE, SZSE and BSE revised theGuidelines for the Application of the Rules on Review for Issuance and Listing of Bondsin March, standardizing bond issuance practices, strengthening information disclosure and verification requirements regarding issuers’ debt-servicing capacity, and clarifying disclosure requirements relating to integrity and compliance in professional conduct. In May, the SSE issued the Notice on Matters Concerning the Pilot Program for Tap Issuance of Corporate Bonds and Additional Issuance of Asset-Backed Securities, launching pilot programs for the tap issuance of corporate bonds and expanded issuances of asset-backed securities to enhance bond-market liquidity. The SZSE joined the pilot program in July.

In the interbank bond market, NAFMII issued documents including the Notice on Matters Concerning Regulating Investment Advisory Services in the Interbank Bond Market, the Self-Regulatory Guidelines on Bond Valuation Business in the Interbank Bond Market (Trial), and the Notice on Strengthening Standards for Issuance and Underwriting in the Interbank Bond Market. These measures further standardize investment advisory services, valuation, and issuance and underwriting in the interbank bond market, effectively maintaining order in the market.

7. Improving the Corporate Governance Regime for Listed Companies and Deepening Reform to Revitalize the M&A and Restructuring Market

In 2025, the CSRC used the occasion of the new Company Law to make continuous improvements to the corporate governance of listed companies. In parallel, the market reform of listed-company M&A and restructuring was deepened, facilitating industrial consolidation, transformation and upgrading through M&A transactions and restructurings.

The CSRC amended and repealed a total of 88 rules and regulatory documents in a combined initiative to implement the new Company Law, and issued further rules including the Guidelines on the Bylaws of Listed Companies, the Rules for Shareholders’ Meetings of Listed Companies, and the Code of Corporate Governance for Listed Companies. These rules further standardize the foundational framework of internal governance and strengthen the responsibilities of “the key few” including directors, senior management, controlling shareholders, and actual controllers, providing stronger safeguards to the interests of listed companies and their shareholders. In December, the CSRC released the Regulation on the Supervision and Administration of Listed Companies for public consultation, which will further strengthen the regulatory framework for listed companies.

For M&A and restructurings of listed companies, the CSRC issued the revised Measures for the Administration of Material Asset Restructurings of Listed Companies in May which fully implemented the Opinions on Deepening the Market Reform for the Mergers, Acquisitions and Restructuring of Listed Companies. Key highlights include enabling installment payment of share consideration for restructurings, simplified review procedures, segmented lock-up periods, and linking the termination of private fund investment holding periods and lock-up periods. These measures significantly enhance regulatory inclusiveness and review efficiency, and effectively stimulate market participation. Driven by the Opinions on Deepening the Market Reform for the Mergers, Acquisitions and Restructuring of Listed Companies and the above revision, market activity in the A-share M&A and restructuring market increased, with 40 listed-company restructuring transactions obtaining regulatory approval in 2025, representing a substantial increase compared with 2024.

8. The Securities and Futures Industry Maintained Stringent Supervision and Regulation, Strengthening the “Safety Net” for Investor Protection

In 2025, the CSRC made significant efforts to implement the new “Nine Guidelines” and continued its tough, enforcement-led regulatory stance with strengthened enforcement deterrence and improved protection mechanisms. It advanced regulatory enforcement and investor protection in a coordinated manner to safeguard the openness, fairness and impartiality of the market and investors’ lawful rights and interests.

In terms of regulatory enforcement, in 2025, the CSRC issued the Basic Rules of the China Securities Regulatory Commission on Discretion in Administrative Sanctions and the Measures for the Implementation of Regulatory and Administrative Measures in the Securities and Futures Markets, and revised the Provisions on the Implementation of the Regime of Undertakings of the Parties in Securities and Futures Agency Law Enforcement, further improving the administrative supervision and enforcement framework. During the year, the CSRC investigated and handled 701 securities and futures illegal cases, with RMB 15.47 billion in fines and confiscations.[1] The sanctioned misconduct was primarily information disclosure violations and insider trading, including the financial fraud cases of Orient Group and Changjiang Pharmaceutical, as well as the insider trading cases of Jingfeng Pharmaceutical and Haohai Biological. In the CSRC’s enforcement action in the Yuebo Power financial fraud case, the CSRC, for the first time, concurrently took action against parties that cooperated with the fraudster, signaling an approach that combines pursuing the principal offender with cracking down on accomplices, and reinforcing full-range accountability to safeguard the stable and sound development of the capital market.

In October, the CSRC issued the Several Opinions on Strengthening the Protection of Small and Medium-Sized Investors in the Capital Market, which proposed specific measures in areas such as strengthening protections throughout the issuance and listing process, further diversifying dispute resolution mechanisms for securities and futures disputes, and reinforcing rule-of-law safeguards for investor protection. The Opinions have become the overall policy framework and guiding program for small and medium-sized investor protection. In the case of Jintongling Technology, the Nanjing Intermediate People’s Court lawfully applied the special representative litigation procedure and, innovatively, adopted an advance judgment approach, awarding compensation totaling over RMB 770 million to more than 43,000 investors, achieving substantial, broad-based compensation within a relatively short timeframe. The combination in this case of strict administrative accountability through enforcement, collective rights protection through special representative litigation, and improved payout efficiency through advance judgments reduced litigation costs for small and medium-sized investors and strengthened their protection, leading to its being designated a practical representative case in the annual investor protection regime.

III. 2026 Regulatory Outlook

1. Trend of Classification-Based Regulation Reinforced for Securities Firms; Industry M&A Consolidation Continues

To foster a multi-tiered, diversified and efficacious industry ecosystem, we expect to see regulatory rules applicable to securities companies being introduced or revised in 2026. These adjustments may include improving risk control indicators and moderately easing leverage constraints to better align with securities firms’ practical needs to increase capital and expand business operations. Leading securities firms are likely to be the primary beneficiaries, with further upside in business growth potential, which may in turn reinforce the trend toward industry consolidation. In addition, the Measures for the Administration of Securities Business Qualifications are expected to be released in due course to establish an access regime classified by business type and based on risk characteristics and to implement differentiated qualification management.

As important participants in China’s capital market, foreign securities firms are expected to benefit from the differentiated regulatory approach. As noted in Chairman Wu Qing’s address at the 8th General Meeting of Members of the Securities Association of China, regulators will “explore differentiated regulation for small and mid-sized securities firms and foreign securities firms in areas such as classification and evaluation and business access, so as to promote specialized development.” Newly established wholly foreign-owned securities firms, unlike earlier-stage joint-venture securities firms that tended to focus on investment banking, seek to leverage their global group-wide strengths and often possess differentiated competitive advantages in niche areas such as wealth management, cross-border services, and derivatives. We expect regulators to foster a more friendly and inclusive regulatory environment for foreign-invested securities firms taking into account their China business models and risk profiles, thereby further enhancing the attractiveness of China’s capital market for foreign institutions seeking to establish and expand their presence.

We also anticipate that the development of best-in-class investment banks and investment institutions may become a key policy theme for capital market reform during the 15th Five-Year Plan period. With clear regulatory direction and policy encouragement, M&A among leading securities firms may generate stronger demonstrative effects, further drive industry consolidation and restructuring, and potentially lead to a higher level of industry concentration.

2. Steady Expansion of Policy Liberalization, with Further Improvements to the Capital Market Opening-Up Framework

As a headline policy document issued in 2024, the new “Nine Guidelines” place policy liberalization at the core of China’s capital market reform agenda. We expect regulators to continue developing the opening-up regime, the regime’s attractiveness to be enhanced, and comprehensive opening-up across markets, products, and institutions to be further deepened.

We expect that in 2026 regulators will deliberate and progress timely implementation of the Work Plan for Improving the Qualified Foreign Investor (QFI) Regime (the “Work Plan”) to make the QFI regime more attractive to foreign investors. In particular, the Work Plan expressly notes that mechanisms for total return swaps (TRS) conducted through the QFI channel will be improved. As a result, offshore TRS arrangements may be subject to clearer and more well-defined regulatory rules, reducing compliance uncertainty for overseas investors engaging in such transactions, lowering compliance concerns and operational costs, and facilitating more diverse channels for foreign capital to participate in China’s onshore capital market. In the bond market, in September the PBOC, the CSRC, and the SAFE jointly issued a policy document to support overseas institutional investors who are permitted to conduct spot bond trading in China’s bond market in undertaking bond repurchase transactions. A series of supporting rules has since been introduced to address overseas investors’ liquidity management needs.

Steady expansion of cross-border capital-market connectivity is also expected to remain a regulatory priority. On the one hand, existing mechanisms such as Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect, Bond Connect, and ETF Connect are likely to be further expanded and improved. On the other hand, as the overseas listing filing regime matures and cross-border cash management continues to be facilitated, we expect to see further improvements in the overseas listing filing process. In terms of product expansion the range of cross-border investment products is expected to continue to grow, including by steadily expanding the scope of available futures and options products, enlarging the eligible-stock universe under Stock Connect, and studying the launch of innovative products such as RMB FX futures. These developments are expected to build on the overall policy foundation for sophisticated liberalization of China’s capital market.

In terms of institutional liberalization, regulators are expected to continue introducing targeted measures to support foreign financial institutions in conducting business in China and facilitate broader participation by foreign institutions in the domestic financial market. Notably, in January, the Opinions onthe Pilot Program of Aligning with International High Standards and Promoting InstitutionalLiberalizationin Eligible Pilot Free Trade Zonesand Free TradePortsin the Financial Field describe 20 innovative measures, including allowing foreign financial institutions to provide new financial services of the same type as those offered by Chinese-funded financial institutions. We expect that regulators may subsequently apply the zone/port experience in expanding institutional liberalization, gradually extending pilot policies beyond the pilot areas, supporting more foreign financial institutions in participating in financial innovation pilots, and encouraging greater foreign institutional participation in China’s financial sector.

3. Improved Regulatory Framework for the Futures and Derivatives Markets to Further Strengthen Prudent and Steady Industry Development

As the key stage where risk management activities play out, futures and derivatives markets operate against the backdrop of geopolitical tensions and shifts in the global energy and resources landscape. We expect regulators to maintain a stability-focused approach in 2026, balancing risk prevention and market development.

China’s OTC derivatives market involves regulatory participation by multiple authorities, requiring the limits of each regulator’s powers and responsibilities to be clarified and regulatory resources pooled. In the section of the OTC derivatives market under the CSRC’s jurisdiction, the Measures for the Supervision and Administration of Derivatives Trading,which was released for public consultation twice in 2023, had not been formally issued as of 2025, reflecting the regulator’s prudent stance. In January 2026, a significantly improved third consultation draft was released reflecting market comments, with significant revisions in terms of regulatory direction, market-entry qualifications and risk-control requirements for derivatives operating institutions, the prohibited conduct definition and extraterritorial application. We expect the final rules to be enacted in 2026.

In the section of the OTC derivatives market regulated by the National Financial Regulatory Administration (NFRA), the Measures for the Administration of Margin Requirements for Non-Centrally Cleared Derivatives Transactions of Financial Institutions(China UMR) will take effect in 2026. On December 30, 2025, the National Association of Financial Market Institutional Investors (NAFMII) published the China Interbank Market Financial Derivatives Transactions Outright-Transfer Performance Assurance Document (For Variation Margin - 2025 Version) (NAFMII VM PAD) to implement the margin requirements for non-centrally cleared derivatives transactions. In 2026, we will closely monitor the implementation of China UMR and variation margin requirements in specific transactions.

From the perspective of institutional regulation, we will continue to monitor the revision process of the Measures for the Regulation and Administration of Futures Companies. The new rules propose to expand the permitted business scope of futures companies, facilitate the orderly reconsolidation of the derivatives trading and market-making businesses from subsidiaries to their parent futures companies, and strengthen compliance and risk-control to support industry high-quality development.

4. Further Build-Out of the Securities and Futures Market-Making Regime, Promoting Rule Harmonization and Upgrades

In recent years, China’s market-making regimes in securities and futures markets have continued to draw on the experience of mature markets while steadily evolving and improving in line with domestic practices.

In October, the CFA implemented the Rules on the Management of Futures Market-Making Trading Business, the first dedicated self-regulatory rules specifically targeting the futures market-making space, where regulation was primarily the responsibility of the relevant futures exchange with its own regime and operational guidelines for market makers. This self-regulatory rule is largely grounded in existing arrangements and current industry conditions, and harmonizes regulatory standards and strengthens coordination and information sharing among exchanges. With a common set of rules, we expect futures market-making business to move more rapidly toward a competitive landscape of specialization and capability-based competition. Firms with stronger capital, trading, systems, compliance and risk management capabilities are likely to expand their market-making coverage and market share. Small and mid-sized firms are more likely to differentiate by focusing on specific contract categories and improved contract quotes.

In the securities market, the market-making regime already covers multiple product types, including STAR Market stocks, Beijing Stock Exchange (BSE) stocks, ETFs, and stock options. Overall, however, the rules governing the market-making regime remain fragmented, with no unified set of rules, and qualification requirements for market-makers varying significantly across product types. We expect regulators to continue improving the market-making regime going forward, including harmonizing regulatory standards, moderately lowering entry thresholds for certain market-making products, and further improving incentive mechanisms for market-makers.

5. Comprehensive, Ringfenced Enforcement in Capital-Market Regulation, with Better Technology Applying Precision to Neutralize Risk

At the beginning of 2026, the CSRC convened an inter-agency work meeting to advance punishment and prevention of financial fraud in the capital market, and noted that the system has entered a critical implementation phase. On January 14, 2026, the Zhejiang CSRC Bureau opened a case for an investigation into suspected misleading statements in the restructuring plan of Sunflower, followed by the CSRC commencing, on the next day, investigation into suspected misleading statements in Ronbay Technology’s major contract announcement. This indicates that information disclosure violations will remain a primary enforcement focus in 2026. With the issuance of theadvance judgment in the Jintongling case and the continued progress of the Meishang Ecology and Jinzhou Port cases, we expect to see more landmark cases in the fields of special representative litigation and advance compensation. In addition, with the formal implementation of the ImplementingProvisions on Parties’ Undertakings in Securities and Futures Agency Law Enforcement and the Measures for the Implementation of Regulatory and Administrative Measures in the Securities and Futures Markets, the regulatory framework for the securities and futures markets will become more complete and detailed. Meanwhile, the strong enforcement stance of “teeth, thorns, and sharp edges” will be maintained, and crackdowns on securities and futures violations will become more targeted and forceful.

Enhanced technology capability will improve regulatory efficacy and be a key supporting tool for effective regulation. At the 2025 Greater Bay Area Exchange Technology Conference held in November, the SZSE released the “Technology and Application Demonstrations for Intelligent Detection of Abnormal Trading Behavior in the Securities Market”, enabling intelligent supervision over investor trading behavior and insider trading activities. This, the SZSE’s first integration of artificial intelligence into frontline regulatory practice, has already identified multiple leads on suspected illegal and non-compliant conduct, and is expected to be applied to a wider range of regulatory scenarios. In December, CSRC Chairman Wu Qing chaired an expanded Party Committee meeting, which emphasized strengthening the application of technology in regulation and continuing to impose heavy penalties for securities and futures violations, including financial fraud, insider trading, market manipulation, and misappropriation or embezzlement of private fund assets. We expect that in 2026, in response to new challenges such as expanding market size, greater structural complexity, and evolving manipulation tactics, the CSRC will further strengthen the use of big data and intelligent technologies to improve the accuracy and timeliness of identifying risky behavior and illegal or non-compliant conduct, and thus achieve a more accurate neutralization of risks in regulation and enforcement.