Research On The Enforcement Guarantee Of Extraterritorial Application Of Chinese Securities Law

Under the background of opening-up of China’s securities market,the securities legal relations such as Shanghai-Shenzhen-Hong Kong Stock Connect,cross-border securities trading of domestic and extraterritorial qualified institutional investors,and cross-border issuance and listing of enterprises are increasingly intertwined,and the extraterritorial application scenarios of China’s securities law are becoming more complex.Securities law enforcement,as the "teeth" of security law enforcement,is of great significance to crack down on illegal securities behaviors,maintain the order of securities market and safeguard investors’ interests.However,there is a certain "disconnection" between the provisions of Article 2,paragraph 4 of the Securities Law concerning extraterritorial application and the law enforcement behavior restricted by the strict territorial principle,and extraterritorial law enforcement is subject to multiple restrictions.Therefore,it is of practical significance to discuss law enforcement protection rules in the context of extraterritorial application of Chinese securities law.At present,scenes such as Chinese Depositary Receipts,overseas listing of Chinese concept shares and cross-border law enforcement of audit papers all reflect the customized proposition of China’s securities law enforcement outside the territory.First,the extraterritorial provisions of the Securities Law adopt the effect test,but for the situation where illegal acts such as securities fraud,cross-border insider trading and market manipulation in China harm the interests of the overseas securities trading market,there are unclear law enforcement basis and insufficient law enforcement,which leads to the question of whether to increase the standard of conduct test.Second,in the extraterritorial application of securities law,it is easy to produce law enforcement competition with extraterritorial law enforcement agencies for the same object of law enforcement.For example,the enforcement of China Securities Regulatory Commission under the Chinese Depositary Receipts and the enforcement of overseas underlying securities are concurrencated,which not only increases the difficulty in the discovery of illegal acts,but also restricts the investigation of extraterritorial enforcement and the implementation of enforcement compulsion.Therefore,the principle of law enforcement competition and coordination,law enforcement cooperation and the method of determining the object of law enforcement jurisdiction have research value.Third,in the context of data,transaction data,audit papers and other data information are indispensable to law enforcement investigation,which leads to the conflict between law enforcement access to overseas data and overseas law enforcement access to domestic data.Under the regulation system of cross-border data flow in China,it is worth discussing how to optimize cross-border law enforcement data cooperation and law enforcement procedures.This paper is divided into the following four chapters: The first chapter is the theoretical analysis of the law enforcement protection applied outside the securities law.The first section defines the basic concepts of extraterritorial and securities law enforcement,and the present situation of China’s extraterritorial securities law enforcement.The internationalization of securities market and the complexity of cross-border illegal activities highlight the necessity of extraterritorial law enforcement.The second section discusses the jurisdiction principles and standards of securities extraterritorial enforcement,and focuses on the evaluation and analysis of behavior standards.By introducing the dichotomy of standards of public enforcement of securities and extraterritorial jurisdiction of private litigation in the United States,the Securities and Futures Ordinance of Chinese Hong Kong and the law enforcement cases related to insider trading,this paper discusses the feasibility of adding standards of conduct.The third section introduces the guarantee of concurrency-cooperation and coordination of extra-territorial law enforcement,including the reasons and coordination principles of law enforcement concurrency-cooperation,and introduces the application of interest balance methodology.The second chapter introduces the current problems of China’s securities extraterritorial law enforcement.The first section,with Chinese Depositary Receipts as the representative,introduces the law enforcement competition and cooperation between domestic securities enforcement and the location of overseas underlying securities.This paper points out the importance of cooperation by analyzing the illegal behavior discovery,extraterritorial law enforcement investigation and enforcement difficulties of underlying securities issuers.The second section analyzes the law enforcement problems caused by the overseas listing of China Concept stock and points out that the punishment of illegal acts in China is insufficient in combination with the Luckin Coffee case.Then,it discusses the method of determining the law enforcement object of Chinese concept stocks under VIE structure,and analyzes the application of the behavior standard according to the 2023 "Rules for Overseas Listing of Domestic Enterprises".The third chapter discusses the cross-border data and the provision of audit papers which have attracted much attention in securities enforcement outside the region.The first section introduces the importance of data in securities law enforcement and the main data types involved in securities law enforcement.The second section analyzes the conflicts between securities extraterritorial law enforcement and the domestic data legislation where the data is located,especially the conflicting obligations caused by unilateral law enforcement requiring domestic subjects to provide data located abroad.Based on China’s domestic data protection legal system,this paper analyzes the cross-border processing of law enforcement data by taking audit documents as an example.The fourth chapter puts forward the perfect path of law enforcement guarantee in view of the above-mentioned practical problems.The first section proposes to add a standard of conduct to the standard of extraterritorial jurisdiction.When the perpetrator is engaged in illegal acts within the territory of China,which seriously damages the order of the overseas securities market,flexible demonstration law enforcement can be carried out in individual cases to improve the strictness of China’s securities law enforcement.On the issue of law enforcement competition and cooperation,on the basis of adhering to the location of securities trading,the interests of all parties are coordinated through the balance of interests method.The second section proposes the improvement of extraterritorial law enforcement procedures,deepening cooperation on the basis of IOSCO Memorandum,and making clear arrangements on law enforcement procedures and types and methods of cross-border data.On the issue of cross-border law enforcement data,normalized mechanisms for data classification and grading,case-by-case approval/general consent,filing management and technical processing can be set up.In addition,existing bilateral mutual legal assistance agreements can be used to facilitate extraterritorial law enforcement procedures and enhance the convenience of extraterritorial law enforcement on the basis of considering the sovereignty implications,ensuring the smoothly extraterritorial enforcement of securities law.