(Yicai Global) Sept. 11 -- Securities brokers must establish a deferred payment mechanism for business personnel bonuses, and may not grant one-time bonus payments, the China Securities Regulatory Commission (CSRC) said in its Guidelines on Internal Control of Investment Banking Business in Securities Companies on Sept. 8. Deferred payment periods shall not be less than three years in principle. If the duration of investment banking projects is less than three years, the deferred payment period may be appropriately adjusted.

Prior to the release of the Guidelines, the commission had organized several special inspections and self-examination activities over the internal control capability of securities brokers in respect of investment banking business.

"In recent years, with the rapid development of investment banking business, there are some phenomena such as a failure to fulfill main responsibilities and a disconnection between business development and internal control," CSRC spokesperson Chang Depeng said at a news conference Sept. 8. "These have affected the healthy and sustainable development of investment banking business."  

After being denied by a broker in the process of internal review, a company intending to get listed on the new third board succeeded through another broker with a less strict internal review process, 21st Century Business Herald reported.

"High incentives must be accompanied by high risk," said a CITIC Securities Co. investment banking department representative. "Many brokers have increased their business in the past two years -- whether it is underwriting bonds or recommended listing on the new third board, behind which there are problems caused by excessive incentives. In the case of gaining more benefits by increasing business volume, the quality of relevant projects will not be guaranteed."

The CSRC also made a requirement on the proportion of internal control personnel with securities brokers. The proportion of staff members engaging in internal control of investment banking business, involving quality control, internal review, compliance, and risk management, shall not be less than 10 percent of the total of investment banking personnel.