China tells brokerages: Mitigate risks during meet

Beijing acts to ensure market stability ahead of key party congress starting on Oct 18

BEIJING • With China's most important political gathering in years fast approaching, regulators have put the nation's top financiers on notice: no surprises from markets.

The China Securities Regulatory Commission (CSRC) has ordered local brokerages to mitigate risks and ensure stable markets before and during the Communist Party's twice-a-decade leadership congress, which starts on Oct 18, according to people familiar with the matter, Bloomberg reported.

Brokerage bosses have been banned from taking holidays or leaving the country from Oct 11 until the congress ends, the people said.

Fortunately for the bosses, China's national day holidays are coming up in the first week of October. Local markets will be shut for an entire week, providing plenty of time to recharge for the congress.

While China routinely takes steps to reduce market swings during key political events, the travel ban on brokerage chiefs illustrates how seriously regulators are taking next month's meeting.

The 19th Party Congress is expected to replace about half of China's top leadership and shape President Xi Jinping's influence into the next decade.

Chinese markets have already rallied this year amid expectations of government support.

The Shanghai Composite Index touched a 20-month high on Tuesday, while the yuan has strengthened more than 6 per cent against the US dollar this year.

The gains have coincided with a drop in volatility on domestic equity and debt markets.

The CSRC told brokerages and futures companies to check for risks in their liquidity, operations and financial health, said the people, who asked not to be named as the information is private, Bloomberg reported.

The regulator also ordered firms to assess their information system security and credit risks and report their findings before October, the people said.

At the congress, at least 11 of the 25 members of the Politburo are expected to retire, unless an informal rule requiring members to step down if they are 68 or older at the time of the congress is relaxed. That includes five of the seven members of the even more powerful Politburo Standing Committee, The New York Times reported earlier.

Mr Xi is likely to present his new line-up publicly at the end of the congress, the paper added.

Among the key questions that will be answered at the meeting are whether Mr Xi's ally and top graft buster Wang Qishan, 69, will stay on past the traditional retirement age, and whether Mr Xi will get his supporters in all the key positions.

There will also be a lot of attention on any moves that would enable Mr Xi himself to stay on in some top leadership capacity after his second term ends in 2022, Reuters reported earlier.

A version of this article appeared in the print edition of The Straits Times on September 14, 2017, with the headline 'China tells brokerages: Mitigate risks during meet'. Print Edition | Subscribe