Changpeng Wan
China’s securities clearing authority has triggered immediate brokerage action with its urgent notification detailing new compliance procedures for the Sci-Tech Innovation Board’s pioneering Growth Layer. This regulatory acceleration arrives ahead of the September 22, 2025 implementation deadline, requiring nationwide brokerages to overhaul investor classification systems within eight weeks. The China Securities Depository and Clearing Corporation (CSDC) dispatched the high-priority directive—formally titled ‘关于报送科创成长层企业股票投资专门风险揭示书签署情况等有关事项的通知’—detailing mandatory investor categorization protocols that will fundamentally reshape access to one of China’s most dynamic capital market segments.
The Urgent Brokerage Mandate: Key Provisions
Account Classification System
Beginning September 22, 2025, all brokerages must implement a dual-label classification system for Sci-Tech Innovation Board accounts:
- ‘C’ designation: For investors completing Growth Layer risk disclosures
- ‘K’ designation: For investors without signed disclosures
The labeling impacts trading permissions, with C-designated accounts qualifying for newly registered Growth Layer securities transactions. CSDC emphasizes brokerages must complete labeling through its unified account platform, providing real-time compliance verification.
Investor Transition Protocol
Existing STAR Market investors face an urgent decision point:
- Ordinary investors must complete supplementary Growth Layer disclosures
- Professional investors require fresh qualifications for Growth Layer securities
Without exception, all non-compliant accounts activated before September 19 will automatically receive ‘K’ classification upon migration freeze at month-end.
Brokerage Implementation Timelines
Technical System Upgrades
The Shanghai Stock Exchange mandated technical preparations simultaneous to CSDC’s notice. Brokerages received official interface specifications and compliance guidelines requiring:
- Integration of digital risk disclosure workflows
- Permission-tiered trading modules
- Multi-channel investor notification systems
The compressed timeline prompted accelerated deployment cycles across major institutions. Guojin Securities led adoption, implementing digital permissions via its Commission Treasure mobile platform within 24 hours launching new Growth Layer eligibility interfaces.
Industry-Wide Compliance Progress
Multiple brokerages confirmed parallel progress:
- Seven institutions confirmed testing completion by mid-August
- Ten brokerages targeting system certification before September 9
- Industry-wide coordination through securities association compliance workshops
The Shanghai Exchange requires formal readiness confirmation ahead of September 15 integration checkpoint.
Regulatory Context for Growth Layer Expansion
The urgent notice implements previously announced STAR Market reforms enhancing market inclusivity. Approved in March 2025, the regulatory framework aims to stimulate early-stage tech funding while strengthening investor protections:
- Distinctive listing pathways for pre-profit innovation enterprises
- Tiered volatility safeguards complementing risk disclosures
- Differentiated trading options aligning with investor sophistication
The Growth Layer forms China’s specialized marketplace for emerging innovators combating capital constraints. Industry analysts project this segment attracting 150+ listings annually.
Investor Requirements for Growth Layer Participation
New Account Authorization Steps
Investors seeking Growth Layer access face sequential requirements:
- Complete standard STAR Market risk disclosures
- Execute Growth Layer-specific investor agreements
- Demonstrate risk assessment comprehension via questionnaires
Electronic verification replaces physical documentation nationwide, enabling instantaneous authorization.
Existing Investor Compliance Pathways
Legacy STAR Market holders face transitional protocols:
- Permission holders maintain current securities trading privileges
- Growth Layer access requires supplemental agreement execution
- Non-compliant investors face automatic restriction by September 22
The July 13 Shanghai Exchange directive made risk disclosures non-negotiable prerequisites for investor participation boundaries.
Brokerage Compliance Responsibilities
Securities firms carry expanded investor protection duties under the urgent mandate:
Disclosure Verification Procedures
The requirements establish non-negotiable brokerage obligations:
- Mandatory electronic disclosure verification
- Confirmation protocol auditing
- Multi-step authentication chains
Any uncertified investor exclusion requires documented justification submitted within clearance periods.
Investor Education Mandates
Brokerages must implement multiple instruction layers:
- Transactional notifications explaining restriction impacts
- Targeted competency training modules
- Market volatility simulation tools
The Shanghai Exchange specifically mandated trader application ‘risk warnings’ containing statistically validated volatility case studies.
Operational Consequences of Non-Compliance
Investor Trading Interruptions
Failing to complete disclosures triggers cascading restrictions:
- Immediate Growth Layer trading suspension
- IPO participation prohibition
- Automatic classification downgrades
The regulatory firewall design specifically prevents accidental exposure through automated compliance locking.
Brokerage Regulatory Risks
Securities firms failing September deadlines face:
- New account approval suspensions
- Per-violation financial penalties
- Compliance certification revocation
Industry regulators have scheduled targeted audits commencing October 2025 validating labeling accuracy.
This regulatory acceleration demonstrates China’s balanced capital markets modernization formula, facilitating corporate fundraising avenues through sophisticated investor segmentation protocols. Investors holding STAR Market positions confront decisive action windows requiring immediate brokerage engagement. Complete pending disclosures through updated trading apps today to secure uninterrupted Growth Layer access, enabling participation in China’s next-generation market ecosystem.
