Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 1

Securities Systems* have a primary responsibility to their users** and other stakeholders. They must provide effective low cost processing. Services should be priced equitably.

* Securities Systems = depositories, settlement and clearing systems
** Users = customers of the securities system, and all other parties to whom the securities system owes a duty of care

1.	Is the board that governs the depository answerable to its users?	Yes. On October 1, 2002, the China Securities Depository and Clearing Corporation Ltd (CSDCC) has assumed the role of securities registration and clearing of the Shanghai Securities Central Clearing and Registration Corporation (SSCCRC) and the Shenzhen Securities Central Clearing Company Ltd (SSCC). The legal title of the SSCCRC and the SSCC has been changed to CSDCC Shanghai Branch, and CSDCC Shenzhen Branch respectively. CSDCC will be responsible for answering to their users on the various issues in future.
2.	Does any single organisation, or sector (e.g. brokers, custodians, Stock Exchange) have a large voting position at the board of the depository?	Effective October 1, 2001, SSCCRC and SSCC have become branches of the newly established China Securities Depository and Clearing Corporation Ltd (CSDCC). Shanghai Stock Exchanges and Shenzhen Stock Exchanges are both shareholders of CSDCC, each holding a 50% stake.
3.	Is there cross subsidisation of products (e.g. international services subsidised by local ones or transaction costs subsidised by asset servicing charges)?	The main sources of income of CSDCC are derived from transaction charges and other service charges, such as handling fees for the distribution of dividends on equities and interest payments on bonds.
4.	What process is in place at the depository to ensure that it meets the needs of all its stakeholders (e.g. institutions, broker dealers, retail investors, issuers)?	The use of CSDCC Shanghai and Shenzhen is mandatory and their operations are under the control of the securities authorities, i.e. China Securities Regulatory Commission (CSRC) and CSDCC. The securities law will also govern the operation of central depositories to ensure that they meet the needs of market participants.
5.	What is the communications strategy of the depository to its stakeholders and how is this run?	The central depositories disclose their information to their users through their proprietary electronic system. Also, any development on central depositories will be announced on the CSRC designated securities related newspaper. If there are any changes, they sometimes deliver the relevant document to the brokers, custodians, listing company etc to seek the market participants' opinions.