Compliance Management Of Securities Business Innovation

Since 2012, business innovation of securities has continued to be introduced by the impetus of regulators, such as margin trading, premium buy-backs, stock pledge financing, OTC, Shanghai-Hong Kong Stock Connect and etc. To some extent, the release of business innovation has increased risk to the stock market, which itself has a characteristic of high risk, therefore, risk management and internal control has becoming a hot spot these years. Business innovation is a two-side sword—it can promote the development of securities market, on the other side, it could bring negative effects if which could not be controlled effectively. Risk events of financing activities outside stock market, the unwinding margin trading, the stock pledge and structured fund in 2015's tumbling stock market has revealed the weakness of current compliance management and internal control of securities company.There has been a long time study of risk management. In accordance with the Basel Accords, the risks can be divided into market risk, credit risk, operational risk. According to the "Central Enterprise Overall Risk Management", it can be categorized as strategic risk, market risk, operational risk, financial risk and legal risk. The securities company's risk management shall include, but not limited to legal risk management, operational risk management, credit risk management, risk management of financial products and so on. Compliance management involves legal risk, operational risk, integrity risk, and compliance management department is responsible for risk management of each securities company's daily business. In 2015, innovative business exposed many problems, as well as compliance management of securities company, where broker X'performance is quite representative in certain aspects. Since 2014 when broker X started internet financing services, innovative business carried out in the securities industiy is worthy of recognition, problems that are exposed during compliance management in innovation business are also common in the securities industry.This paper, through theoretical analysis and case analysis, analyzes the present situation and existing problems of compliance management of X broker, and puts forward some thinking about how to strengthen the compliance management. The main structure of this paper is as follows:First, it explains the reason of studying compliance management of innovative business, sort through the status quo of innovative business compliance management, and propose the starting point of this article.Second, it explains the definition of compliance management, risk management, internal control and some relative theories, describe the relationship among them and state the necessity of research on compliance management of securities companies.Finally, it uses X broker as an example to analyze the current situation and problems of the securities industry compliance management. Particularly, it will analyze and discusses two major work about compliance management of X broker.The first part is compliance management department itself and compliance officers. According to the requirements of the Securities Regulatory Commission, compliance management unit should be set as an independent department of a securities company, the heads -compliance director should be the company's executives, and department staff should report to the director of compliance. Compliance management includes system construction, institutional construction and cultural construction. Securities companies, with brokerage X as the representative by, have basically completed system construction. Compliance Management is completed independently by the Compliance Management Department, Compliance Management Department dispatch resident compliance officers to work in the business department of securities to supervise and complete compliance management of securities business department. Compliance Management improves system construction through the company's compliance management system, anti-money laundering management system, and a series of business management measures. Compliance officers should obtain professional knowledge of laws, securities business systems and so on, and the dispatched compliance officer is responsible for overseeing the daily business activities of the securities business department, completing the required work according to relative system of compliance management and the requirement of local Securities Regulatory Bureau of CSRC. and submitting periodic reports. There are still a lot of problems found in inspection, compliance management work tends to be limited to completing the requirements of the higher authorities, but the professionalism and subjective initiative of compliance officer is not strong, and compliance management work is not done actively inside-out. Therefore, to change the compliance management mode from passive to active, it is necessary for broker X and securities industry to start building the culture of compliance.The second aspect is the co-supervision and management regulation of the department of compliance management, which is mainly about participants management. Compliance management is not only faced with some problems of the inner workings, but also has to consider the supervision work of employee management and appropriate education for investors. According to the job responsibilities division of Broker X, sales staff, service personnel are facing investors, and showing the strength of the company directly. According to the analysis of the requirement of the job evaluation and professional staffs themself, practitioners are often the important factor of compliance risk. Thus, enhancing the operational capacity should become the key of compliance management supervision. At the same time, compliance cultural construction is essential. The other aspect is appropriate management of investors, since the stock market has changed from the buyer responsible for the results of risk to the shared responsibility of the buyer and the seller for the results of risk, compliance management'supervision of the proper management of investor still remains at the system management level. As to some key details, such as the risk assessment of financial product sales, compliance management has not implemented in practice.Finally, with reference to three typical compliance management cases of broker X in 2015, this paper expounds how to improve in the compliance management problems.This paper starts from the actual situation of the compliance management in innovation business of a single financial institution to show the general status quo of securities industry compliance management at present stage, and comes to a conclusion from existing problems.