Article 116 A stock exchange shall withdraw a certain proportion of funds from the transaction fees, membership fees and seat fees as charged thereby to establish a risk fund. The risk fund shall be subject to the administration of the council of the stock exchange. The specific withdrawal proportion and use of risk fund shall be provided for by the securities regulatory authority under the State Council in collaboration with the fiscal department of the State Council.

Article 117 A stock exchange shall deposit its risk fund into a special account of its opening bank and may not unlawfully misuse it.

Article 118 A stock exchange shall, pursuant to laws and administrative regulations of securities, formulate the rules on listing, trading and membership administration as well as any other relevant rules, and shall report them to the securities regulatory authority under the State Council for approval.

Article 119 Any person-in-charge and any other practitioner of a stock exchange that has any interest relationship or any of his relatives has any interest relationship with the performance of his duties relating to securities trading shall withdraw.

Article 120 Any trading result of a transaction, which has been conducted in accordance with the trading rules as formulated according to law, may not be altered. A trader who has conducted any rule-breaking trading may not be exempted from civil liabilities. The proceeds as generated from any rule-breaking trading shall be dealt with pursuant to the relevant regulations.

Article 121 Where any staff of a stock exchange who is engaged in securities trading violates any trading rule of the stock exchange, the stock exchange shall impose him disciplinary sanctions. Under any serious circumstances, the qualification thereof shall be revoked and the violator shall be prohibited from entering into the stock exchange to engage in any securities trading.
 
Chapter VI Securities Companies

Article 122 The establishment of a securities company shall be subject to the examination and approval of the securities regulatory under the State Council. No entity or individual may engage in any securities business without the approval of the securities regulatory under the State Council.

Article 123 For the purpose of the present Law, the term "securities company" as mentioned in the present Law refers to a limited- liability company or stock-limited company that has been established and engages in business operation of securities according to the Corporation Law of the People's Republic of China as well as the provisions of the present Law.

Article 124 The establishment of a securities company shall fulfill the following requirements:
 (1) Having a corporation constitution that meets the relevant laws and administrative regulations;
 (2) The major shareholders having the ability to make profits successively, enjoying good credit standing and having no irregular or rule-breaking record over the latest 3 years, and its net asset being no less than 0.2 billion yuan.
 (3) Having a registered capital that meets the provisions of the present Law;
 (4) The directors, supervisors and senior managers thereof having the post-holding qualification and its practitioners having the qualification to engage in securities business;
 (5) Having a complete risk management system as well as an internal control system;
 (6) Having a qualified business place and facilities for operation; and
 (7) Meeting any other requirement as prescribed by laws and administrative regulations as well as the provisions of the securities regulatory authority under the State Council, which have been approved by the State Council.

Article 125 A securities company may undertake some of or all the following business operations upon the approval of the securities regulatory authority under the State Council:
 (1) Securities brokerage;
 (2) Securities Investment consulting;
 (3) Financial advising relating to activities of securities trading or securities investment;
 (4) Underwriting and recommendation of securities;
 (5) Self-operation of securities;
 (6) Securities asset management; and
 (7) Any other business operation concerning securities.

Article 126 A securities company shall indicate the words "limited-liability securities company" or "stock-limited securities company" in its name.

Article 127 Where a securities company engages in the business operation as prescribed in item (1), (2) or (3) of Article 125 of the present Law, its registered capital shall be RMB 50 million yuan at the least. Where a securities company engages in any of the business operations as prescribed in item (4), (5), (6) or (7), its registered capital shall be RMB 100 million yuan at the least; Where a securities company engages in two or more business operations as prescribed in item (4), (5), (6) or (7), its registered capital shall be 500 million yuan at the least. The registered capital of a securities company shall be the paid-in capital. The securities regulatory authority under the State Council may, according to the principals of prudent supervision and in light of the risk rating of all business operations, adjust the requirement of minimum amount of registered capital, which shall be no less than the minimum amount as prescribed in the preceding paragraph herein.

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