Research On Legal Issues Of Advance Compensation In China’s Securities Market

In December 2019,the newly revised "Securities Law of the People’s Republic of China"was officially adopted,adding a chapter on investor protection.Firstly,the system of advance compensation was legislated.In practice,ordinary investors often suffer from illegal securities acts because they cannot obtain sufficient information and do not possess relevant professional qualities.For example,resolving securities disputes through litigation has a long cycle and is difficult to obtain effective compensation.Therefore,in order to ensure the smooth operation of the securities market,it is imperative to protect the rights and interests of ordinary investors.As a civil settlement outside litigation,advance compensation is a beneficial system derived from the securities market activities in China’s current practice,and has played a significant role in safeguarding the interests of ordinary investors.To explore the development process of China’s securities market,the compensation system first operated by Wanfu Biotechnology is still the first time.Its sponsor,Ping An Securities,established a special compensation fund to compensate for the loss.Later,many scholars have paid attention to and explored this field.Due to the fact that the breeding practice of the advance compensation system is prior to the theory,and the large gap in the legislative level,it is difficult to operate in practice.To this end,the article starts with an introduction to the relevant mechanisms for investor protection outside the region,introducing its institutional background,connotation,and nature.It makes a comprehensive analysis of the advance compensation system in the securities market from both theoretical and practical aspects.Based on foreign securities investor protection systems,this paper compares and extracts useful experiences for China’s institutional construction in this field.After discussing the problems existing in the main rules,implementation rules,and protection of compensation rights of the advance compensation system in China’s securities market,this paper points out a series of measures to distinguish qualified investors,clarify compensation targets,expand the source of compensation funds,and ensure the implementation of the right of recourse,in order to play an important role in the protection of investors in the securities market.