China's top securities organization plans to raise the threshold for the position of a board chairman of securities firms while senior managers of those firms must obtain regulator's approval before their appointments, China Securities Journal reported Saturday.

According to the draft edition of Regulations on Supervision of Qualifications for Directors, Supervisors and Senior Managers of Securities Firms, made public to seek public advice, the board chairman of a securities firm must have at least five years' working experience in securities sector before they are eligible for the position.

Under current regulations, one has to have only three years' working experience in the sector.

Under the draft regulations posted on the website of the China Securities Regulatory Commission, the regulator would expand its targets of supervision by including directors of the board of a securities firm and its supervisors, secretary of the board of a listed firm, and senior managers of its subsidiary.

Directors, supervisors and senior managers of securities firms must obtain approval of the regulator before they take their positions, according to the draft regulations.

People who are directors, supervisors and senior managers of securities firms must pass qualifications tests within three years after new regulations go into effect.

They would be given three chances of sitting for the tests and those who fail in the test would not be allowed to hold their posts.

As part of its efforts to invigorate its capital market, China has been working hard to clean up the securities firms that have been troubled by heavy losses due to irregularities and bearish stock market between 2001 and 2005.

Due to the five years' bearish period of China's stock market caused by flawed institutional problems and poor corporate governance, the country's 100-plus securities firms witnessed billions of yuan of deficits in the past several years.

The downturn in the stock market has triggered the closing of some securities firms, including the Guangdong International Trust & Investment Corporation and Nanfang Securities Company, one of the country's top 10 and oldest securities firms.

Shares on the China's stock markets have gone up by about 40 percent on average since Dec. 7 of last year thanks to the country's ongoing reform of its State share form, and efforts to crack down on irregularities.

China has also launched nationwide campaign to improve corporate governance of securities firms and listed companies.

Source: Xinhua