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New Security Regulation Might Limit Investors’ Ability to Participate in Security Trading

Guangming Daily published an article which stated that a new regulation that the China Security Regulatory Commission introduced is set to become effective on July 1. The regulation requires that investors fill out a survey on “Risk Tolerance Ability.” The sample questions include questions such as current source of income; educational background or work experience; and plans to utilize returns from the investments. Then the investors will be divided into the following five types based on their ability to take risks, and how conservative, cautious, stable, active, and aggressive they are. Securities will be divided into different levels based on the level of risk. Investors in each category will only be able to purchase securities that fit their category or any categories that are rated lower than theirs. The new regulations are said to “sell the right products to the right group of investors.” The article pointed out that the new regulation will affect 125 million investors and will likely mean that not every citizen will have an opportunity to participate in trading securities.

Source: Guangming Daily, June 20, 2017
http://politics.gmw.cn/2017-06/20/content_24832845.htm