MEMORANDUM OF UNDERSTANDING
1. The Commissioners of Her Majesty's Treasury of
the United Kingdom ("the Treasury"), have governmental responsibility
for policy and legislation in the sphere of financial services and
the regulation of investment business under the United Kingdom Financial
Services Act 1986 ("FSA"), oversight of the Securities and Investments
Board ( the "SIB") and the London Stock Exchange in its capacity as
the competent authority for listing, and for implementing arrangements
with overseas regulators for exchanging information. The Treasury
is responsible for close liaison with other bodies and agencies, including
the Department of Trade and Industry ("DTI") which has powers to conduct
investigations in the United Kingdom on behalf of overseas regulatory
2. The SIB is the agency, designated by the Treasury
under the FSA, to be responsible for most of the financial services
functions under the Act, including oversight of the recognised self-regulating
organisations and recognised investment exchanges and for making rules
under which investment business is conducted in the UK. It can exchange
information with overseas regulatory authorities in accordance with
the provisions of the FSA and with the Investment Services Regulations
3. The China Securities Regulatory Commission ("CSRC")
has been established with the approval of the State Council of the
People's Republic of China as the executive agency of the Securities
Policy Committee of the State Council in the supervision and regulation
of the national securities and futures markets in China.
4. In this Memorandum of Understanding ("MoU"), "Authorities" means
the Treasury, the SIB, and the CSRC.
5. The Treasury and the SIB on
one hand, and the CSRC on the other, recognising
the increasing international activities in the securities and futures
markets and the corresponding need for mutual cooperation between
the relevant national authorities have, after friendly consultation,
reached the following understanding.
6. The purpose of this MoU is to promote investor protection and
the integrity of the securities and futures markets by providing a
framework for cooperation, including channels for communication, increased
mutual understanding and the exchange of regulatory and technical
7. The MoU serves as a basis of cooperation for the Authorities and
does not create any binding international legal obligations, nor does
it modify or supersede any laws, regulations or regulatory requirements
in force in or applying to the United Kingdom or China. The MoU does
not create any rights enforceable by third parties, nor does it affect
any arrangements under other MoUs.
8. The performance of the provisions of this MoU shall be consistent
with domestic laws, regulations and conventions of the respective
countries of the Authorities and within the availability of respective
resources of the Authorities, and the performance of the provisions
shall not be contrary to the public interests of the country of the
9. The Authorities agree to promote mutual assistance and the exchange
of information to assist them to perform their respective functions
in relation to the following areas:
a) the duties of issuers of securities to make full and fair disclosure
of information relevant to investors;
b) the enforcement of the laws and rules relating to issuing of,
dealing in, arranging deals in, managing and advising on securities
and futures contracts and other investment products;
c) promoting and securing the fitness and properness of dealers
and advisers in securities and futures markets, and promoting high
standards of fair dealing and integrity in their conduct of business;
d) supervision and monitoring securities and futures markets and
clearing and settlement activities, and their compliance with relevant
laws and regulations;
e) market manipulation, insider dealing and other deceptive and
fraudulent practices concerning securities issuing and trading, the
activities of listed companies, and trading in futures and options
f) technical cooperation and assistance; and
g) other matters agreed upon by the Authorities.
10. Requests will be made in writing. In urgent cases, requests may
be made in summary form to be followed within 10 business days by
a full request.
11. Each request will be assessed by the requested Authority to determine
whether information can be provided under the terms of this MoU. In
any case where the request cannot be accepted completely, the requested
Authority will consider whether there may be any relevant information
which can be given.
12. Requests should specify the following:
a) The information requested (including the identity of persons,
specific questions to be asked);
b) the purpose for which the information is sought (including details
of the laws or regulatory requirements pertaining to the matter which
is the subject of the request);
c) a description of the conduct or suspected conduct which gives
rise to the request;
d) the link between the specified laws or regulatory requirements
and the regulatory functions of the requesting Authority;
e) the relevance of the requested information to the specified laws
or regulatory requirements;
f) to whom, if anyone, onward disclosure of information is likely
to be necessary and the reason for such disclosure.
13. In deciding whether to accept or decline a request the requested
Authority will take account of:
a) whether the request relates to the breach of laws or regulations
which have no close parallel in the country of the requested Authority;
b) whether broadly equivalent assistance would be available from
the country of the requesting Authority;
c) whether the request involves an assertion of a jurisdiction not
recognised by the Requesting Authority.
d) whether it would be contrary to the public interest for assistance
to be given.
14. Any document or other material provided in response to a request
under this MoU and any copies thereof must be returned on request.
15. The assistance or information will be provided under this MoU
by the Authorities for the purposes of assisting each other in the
performance of their regulatory functions relevant to the scope of
this MoU. To the extent permitted by law, each Authority will keep
confidential any request for information made under the MoU and any
matter arising in the course of its operation and such assistance
or information will not be disclosed by the recipient to third parties
without the consent of the Authority providing the assistance or information.
16. The respective Authorities intend to work together to identify
and address, subject to the availability of personnel and resources,
the training and technical assistance required to facilitate the development
of the regulatory framework for securities and futures markets both
in the United Kingdom and China.
17. The Authorities may consult, at any time, about a request or
18. The Authorities will consult and cooperate about the training
and exchange of personnel.
19. The Authorities may consult and revise the terms of the MoU in
the event of a substantial change in the laws, regulations or practices
affecting the operation of the MoU.
20. To improve the cooperation under this MoU, the Authorities will
conduct consultations and discussions on the implementation of the
21. All communications between the Authorities should be between
the points of contact below unless otherwise agreed.
22. The Deputy Director of the Financial Regulation Directorate is
the point of contact in the Treasury.
23. The Head of Enforcement and Legal Services Division is the point
of contact in the SIB.
24. The Director of the Department of Foreign Affairs is the point
of contact in the CSRC.
25. This MoU may be terminated by an Authority by giving thirty days'
written notice to the other Authorities.
ENTRY INTO EFFECT
26. This MoU is effective from the date of its signature by the Authorities.
SIGNED THIS SEVENTH DAY OF OCTOBER, 1996 IN BEIJING
IN DUPLICATE IN THE ENGLISH AND CHINESE LANGUAGES, BOTH VERSIONS
BEING EQUALLY AUTHENTIC