Legal Issues On The Protection Of Investors’ Trading Rights Of Chinese Depository Receipts (CDR)

The introduction of China depository Receipt(CDR)provides a channel for overseas enterprises to go to domestic securities market for listing and financing,which is conducive to improving the internationalization level of China’s capital market.Due to its foreign-related and innovative properties,CDR is easily favored by investors in the initial stage of issuance.However,the complexity of legal relations and trading mechanism of CDR also puts forward higher requirements for the protection of investors’ trading rights.This paper first analyzes the basis legal relationship of the CDR,the trust property of depository agreement and the trading mechanism of the CDR,then the CDR investors trading right protection and its risks,outside experience of protection of DR investors trading right are studied,such as to inquire into the CDR investors trading right protection legal system laid the foundation,In view of the corresponding problems put forward suggestions to improve.Maintaining the fairness and freedom of trading are two important dimensions to protect the trading rights of CDR investors.CDR information disclosure and cross-border supervision system protect the trading rights of CDR investors from the perspective of fairness of transactions.However,the CDR information disclosure system adopts a single subject of obligations,double disclosure standards and cross-border synchronous disclosure mode,which is easy to cause problems such as narrow channels for CDR investors to obtain information,declining quality of information disclosure by overseas issuers,and insufficient guarantee for fairness of CDR transactions.The cross-border CDR supervision system has some problems,such as the inoperability of the extraterritorial applicable rules of the Securities Law and the imperfect cooperation mechanism of cross-border supervision,which makes it difficult to deal with cross-border securities violations,and makes the fairness of CDR transactions face potential threats.The CDR cross-border conversion system protects the trading rights of CDR investors from the aspect of transaction freedom.However,as the capital account is not fully open to the outside world,the business subjects and capital scale of CDR cross-border conversion are limited,which leads to CDR unable to successfully achieve cross-border conversion with overseas underlying securities,and hinders the freedom of CDR trading to a certain extent.In order to better protect the trading rights of CDR investors,it is necessary to improve the relevant legal system.The CDR information disclosure system should be improved from three aspects: strengthening the information disclosure obligation of depository and custodian,completing the CDR information disclosure content and format guidelines,and relaxing the time requirement of CDR temporary information disclosure.For the CDR cross-border regulatory system,should further refine the extraterritorial applicable rules of the Securities Law and strengthen cross-border securities regulatory cooperation.The improvement of CDR cross-border conversion system needs to expand CDR cross-border conversion business entities,and appropriately relax the foreign exchange control on CDR cross-border flows.