China to brokerage bosses: No surprises during Xi Jinping's big meeting in October

Chinese President Xi Jinping at a press conference at the 2017 Brics Summit in Xiamen, Fujian province, China, on Sept 5, 2017.

BEIJING (BLOOMBERG) - 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.

Brokerage bosses have been banned from taking holidays or leaving the country from Oct 11 until the congress ends, the people said. The CSRC did not immediately reply to a faxed request for comment.

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 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 (Sept 12), while the yuan has strengthened more than 6 per cent against the 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.

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

Brokerage bosses were told to avoid travel of any kind from Oct 11 until the congress ends, including business trips.

Fortunately for them, 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.

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