Interim Procedures of Shanghai Municipality for the Administration of Data Trading Venues
(March 15, 2023)
SMEITC D (2023) No. 3
Interim Procedures of Shanghai Municipality for the Administration of Data Trading Venues
Chapter I General Provisions
Article 1
With a view to preventing and resolving data trading risks, regulating the behavior of data trading venues in Shanghai Municipality, promoting the orderly circulation and utilization of data in accordance with the law, and building a healthy, efficient and active data market, these Procedures are formulated in accordance with the Data Security Law of the People's Republic of China, the Personal Information Protection Law of the People's Republic of China, the Regulations of Shanghai Municipality on Data and the Interim Procedures of Shanghai Municipality for the Administration of Trading Venues and other relevant laws and rules, and in the light of the actual circumstances of this Municipality.
Article 2
These Procedures shall apply to the establishment, alteration, termination, operating rules, supervision and management of data trading venues in this Municipality, except as otherwise prescribed by laws, rules and regulations.
For the purposes of these Procedures, the term "data" refers to any record of information by electronic or other means; "data trading activity" refers to the trading behavior around data;
"Data trading venues" refers to the trading venues approved by the Municipal People's Government to organize and carry out data trading activities within the administrative area of this Municipality;
"Data trading service institutions" refers to institutions that provide third-party evaluation of data assets, data compliance, data quality, etc., and professional services such as trading matching, trading agency, professional consulting, data brokerage and data delivery in data trading activities.
Article 3
Data trading in data trading venues shall be conducted in accordance with the principles of free will, equality, fairness and good faith, and shall not infringe upon the legitimate rights and interests of others or harm the public interest.
Article 4
Shanghai Municipal Economy and Information Technology Commission (hereinafter referred to as the "Municipal Economy and Information Technology Commission") shall, as the competent industry authority of the data trading venues in this Municipality, perform the regulatory duties, and, jointly with relevant departments, conduct market entry management and strengthen ongoing and ex post regulation in an effective manner.
Shanghai Municipal Joint Meeting for Financial Stability and Coordination (hereinafter referred to as the "Joint Meeting") shall, in accordance with the working mechanism of this Municipality for straightening out and rectifying various types of trading venues, be responsible for guiding and coordinating the regulation and management of trading venues.
Chapter II Establishment, Alternation and Termination
Article 5
The establishment of a data trading venue in this Municipality shall, in principle, take the form of a corporate organization and comply with the provisions of the Company Law of the People’s Republic of China and the Interim Procedures of Shanghai Municipality for the Administration of Trading Venues.
Article 6
To establish a data trading venue in this Municipality, the applicant shall, in accordance with relevant requirements, submit an application to the Municipal Economy and Information Technology Commission, which shall report it to the Municipal People's Government for approval.
Without the approval of the Municipal People's Government, no unit or individual shall establish a data trading venue, nor shall it organize trading or relevant activities in a data trading venue directly or in a disguised manner.
Article 7
Where a data trading venue makes any change in the following matters, it shall file an application to the Municipal Economy and Information Technology Commission, and upon receiving the application, the latter shall file an assessment opinion and report to the Municipal People's Government for approval:
1. change of its name;
2. change of its business scope;
3. change of its registered capital;
4. division or merger of the data trading venue; or
5. any other matter that has a material impact on the conditions for its establishment.
Any change of trading instruments, trading modes, trading rules or major shareholders of a data trading venue shall be reported to the Municipal Economy and Information Technology Commission for approval. Upon its approval, it shall issue an opinion of approval and send a copy to the Joint Meeting Office.
Where a data trading venue makes any change in the following matters, it shall report to the Municipal Economy and Information Technology Commission for filing within 10 working days after the occurrence of the changes, and send a copy to the Joint Meeting Office:
1. change of its legal representative, directors, supervisors and senior managers;
2. change of its domicile or business premises of the branch;
3. change of the type of enterprise;
4. amending the articles of association, risk control system or other management systems;
5. carrying out external cooperative operations; or
6. any other changes prescribed by the Municipal Economy and Information Technology Commission.
Article 8
Where a data trading venue intends to terminate the provision of trading platform services, it shall report to the Municipal Economy and Information Technology Commission at least 3 months in advance, inform the data trading entities and other relevant entities in a timely manner, determine the exit plan, publicize an exit announcement and disposal plan on the media, properly handle the trading funds, deposit and other assets of the data trading entities, and ensure the capital safety of data trading entities and the legitimate rights and interests of other relevant entities. The Municipal Economy and Information Technology Commission shall review the exit plan and report it to the Municipal People's Government for approval after publicizing the exit plan.
Where a data trading venue is dissolved, it shall be liquidated in accordance with legal procedures. After liquidation, it shall make an application to the market regulatory authorities for deregistration and issue an announcement on the media.
Where a data trading venue terminates due to bankruptcy, bankruptcy liquidation shall be conducted in accordance with the Enterprise Bankruptcy Law of the People's Republic of China and relevant provisions.
Chapter III Operation Standards
Article 9
A data trading venue shall strictly comply with the laws and rules and the provisions of regulatory authorities, follow the principles of openness, fairness, justice and security, consciously accept supervision, strictly prevent risks, and design its own business model in a scientific manner for the purpose of promoting the development of the digital economy and the market-oriented allocation of data.
Article 10
A data trading venue shall operate in accordance with the law and in compliance with the business scope approved by the market regulatory authorities, ensure the normal operation of data trading activities, and provide the following services for trading entities:
1. providing trading venues, trading information systems and other infrastructure for data trading;
2. organizing data trading activities, providing services such as data product registration, data product listing, organization of trading and concluding of agreement, trading fund settlement, issuance of trading vouchers and information disclosure;
3. providing data trading dispute mediation and other services; and
4. other all-round supporting services related to data trading activities.
Article 11
A data trading venue shall establish and improve the corporate governance structure in accordance with the law, improve the rules of procedure, decision-making procedure and internal auditing system, and maintain the effectiveness of internal governance. It shall designate a senior manager as the person in charge of compliance, assume the compliance responsibilities and supervise the legal and compliant operations of the data trading venue.
Article 12
A data trading venue shall establish and improve the financial management system and truthfully record and reflect the financial status, operation results and cash flows of enterprises in accordance with the Accounting Standards for Business Enterprises and other requirements.
The information system of a data trading venue shall meet the requirements of business operation and supervision and provide remote access to the Municipal Economy and Information Technology Commission. The system shall be equipped with technical measures such as data security protection and backup and other necessary measures to ensure the security of data, store various data for no less than 20 years and provide the required data information for the Municipal Economy and Information Technology Commission or its designated agencies in a timely manner.
Article 13
A data trading venue shall regularly submit monthly reports, quarterly reports and annual reports to the Municipal Economy and Information Technology Commission in accordance with relevant provisions. The content of the reports shall include information such as statistical analysis of data trading.
In case of the following major matters, the data trading venue shall report to the the Municipal Economy and Information Technology Commission in a timely manner and send a copy to the Joint Meeting Office:
1. The data trading venue or any of its legal representative, directors, supervisors, and senior managers is under case investigation or taken against compulsory measures for any suspected major violation of laws and rules;
2. Major financial expenditures and financial decisions of the data trading venue may bring relatively high financial or operational risks;
3. It is involved in a lawsuit that accounts for more than 10% of its net assets or has a material impact on its operational risks;
4. It has a material adverse impact on social stability;
5. Any shareholder of the data trading venue changes its name or undergoes substantial changes; or
6. Any other major matters.
The Municipal Economy and Information Technology Commission may, when necessary, require the data trading venue to submit an interim report on major data trading projects, abnormal data trading, serious data security accidents, penalties by relevant departments and other matters, stating the cause of the incident, its current status, possible consequences and measures to be taken.
The information and materials submitted by the data trading venue shall be authentic, accurate and complete.
Article 14
A data trading venue shall fill and submit the required information in the local financial regulatory information platform of this Municipality in a timely and accurate manner. It shall, in accordance with relevant provisions, submit the trading information of the previous month before the 10th day of each month, submit the financial information of the previous quarter before the 10th day of the first month of each quarter, and submit relevant statements before January 20 and July 20 of each year.
Article 15
A data trading venue shall formulate trading rules and other relevant business rules related to data trading activities in accordance with the law.
The trading rules shall include: trading instruments and trading periods; trading methods and processes; confirmation mechanism of data-related rights and interests; risk control; rules for fund settlement; data delivery rules; trading dispute resolution mechanism; trading fee standards and collection methods; rules for the processing and publication of trading information; other matters such as exception handling and error handling mechanism.
Article 16
A data trading venue shall strengthen the application of digital technologies such as big data, cloud computing, artificial intelligence, blockchain, privacy computing and smart contract, establish and improve fully digital trading platforms, and realize the whole-process digitalization of registration, listing, price inquiry, contract concluding, settlement, delivery, trading management and professional services so as to guarantee that data trading is full-time listed and could be conducted in the global area, with the whole process able to be traced.
Article 17
A data trading venue shall establish and improve network security, data security and personal information protection systems, and take corresponding technical measures and other necessary measures to ensure the security of data trading. In the event of network security, data security or personal information security, it shall immediately take disposal measures and report the incidents to the relevant municipal competent departments in a timely manner and in accordance with relevant provisions.
Article 18
A data trading entity entering a data trading venue may independently choose a data trading service institution and conclude agreements with it on service content, method, fee, etc.
A data trading service institution shall establish a standardized, transparent, safe, controllable and traceable data trading service environment, formulate trading service processes and internal management systems and take effective measures to protect data security, personal privacy, personal information, trade secrets and confidential business information.
Article 19
A data trading venue shall implement a third-party settlement system for trading funds, enable the bank with which the account for trading funds is opened or non-bank payment institution to be responsible for the settlement of trading funds, exercise separate accounts-based management by customer, and ensure that the settlement of funds meets the requirements of the trading instructions of the data trading venue.
A data trading venue shall agree in the form of a supervision agreement with a qualified commercial bank on the nature of the account, function of the account, specific content of account use, method of supervision and other matters, and specify the responsibilities and obligations of both parties. The data trading venue shall not operate or conduct publicity by using the credit of the bank.
Article 20
A data trading venue shall develop risk warning, risk disposal and other risk control systems and emergency response plans, and report to the Municipal Economy and Information Technology Commission for record purposes.
Article 21
A data trading venue shall establish a data trading dispute resolution mechanism. Where trading entities have any dispute during the trading process, they may apply to the data trading venue for mediation. They may also apply to an arbitration institution for arbitration or file a lawsuit with a people's court in accordance with the law.
Article 22
A data trading venue shall establish an information disclosure system. Information disclosure shall include: company establishment and senior management personnel; trading rules, fund management, risk control and other major systems; trading instruments; major emergencies in operation; company closure, customer service and complaint handling channels.
The information disclosed shall be authentic, accurate, complete, timely, and without false records, misleading statements or material omissions.
Article 23
A data trading venue and its branch offices, members, agents, and authorized service agencies shall not illegally engage in the following activities:
1. conducting trading activities without a customer's authority, against a customer's will, or under the guise of a customer;
2. betting against a customer;
3. failing to provide a customer with a document of trading confirmation within the prescribed time;
4. embezzling the trading funds of a customer;
5. inducing customers to conduct unnecessary trading for the purpose of earning commission;
6. providing or disseminating false or misleading information to customers;
7. using trading software for back-end manipulation;
8. releasing texts or information that forecasts the prices of trading instruments;
9. carrying out external cooperative operations or assigning operational rights without authorization; or
10. any other conduct against a customer’s true will or in conflict with a customer's interests.
A data trading venue shall not provide financing or financing guarantee for any of its shareholders, actual controllers or other related parties, nor shall it seek illegal interests from its agency.
A data trading venue or any of its departments shall not engage in the trading business of the data trading venue directly or in a disguised manner; any of the relevant employees of a data trading venue or any of its shareholders and actual controllers shall neither participate in the trading in the data trading venue nor disclose inside information or use inside information to obtain illegal interests.
Chapter IV Supervision and Management
Article 24
The Municipal Economy and Information Technology Commission shall perform supervision duties on data trading venues in this Municipality in accordance with the law, regularly conduct supervision evaluation of data trading venues, and incorporate the evaluation results into the assessment of data trading venues.
Article 25
The Municipal Economy and Information Technology Commission may, based on the actual circumstances, check physical objects, consult and copy relevant documents and materials, interview and inquire relevant personnel of data trading venues, and request documents and information related to the operations of data trading venues from relevant personnel, at the time of investigation or inspection. The Municipal Economy and Information Technology Commission may, when necessary, take measures such as issuing risk alerts and notifying their cooperating institutions or other relevant entities of the situation.
A data trading venue shall cooperate with the Municipal Economy and Information Technology Commission in implementing supervision in accordance with the law, without refusal, obstruction or withholding.
Article 26
Where the Municipal Economy and Information Technology Commission deems that a data trading venue has any of the following circumstances, the Municipal Economy and Information Technology Commission may commission an intermediary with corresponding qualifications to conduct a special audit or assessment or issue a legal opinion:
1. A report or the like filed by a data trading venue contains false records, misleading statements or material omissions;
2. Violating the provisions on the protection of customer assets and the monitoring of secure custody of funds or management of risk supervision indicators;
3. Violating relevant provisions and carrying serious potential risks; or
4. Other material circumstances determined by the Municipal Economy and Information Technology Commission in accordance with the principle of prudential supervision.
Article 27
Where, in performing its duty to supervise data security, a relevant municipal competent authority finds a relatively high security risk in data processing activities, it may interview the relevant organizations and individuals in accordance with the prescribed authority and procedures and require the relevant organizations and individuals to take measures to rectify and eliminate potential risks.
Article 28
Where a data trading venue violates relevant provisions, the Municipal Economy and Information Technology Commission shall order it to cease the relevant activities and take corrective action within a specified time limit; if corrective action fails to be made within the time limit, or the corrective action is ineffective, the the Municipal Economy and Information Technology Commission shall take regulatory measures such as issuing a letter of warning, denying the creation of new trading instruments, and canceling irregular trading instruments; if the circumstances are serious, the Municipal Economy and Information Technology Commission shall shut down or ban the data trading venue in accordance with the law, with the approval of the Municipal People's Government; and if the violation is suspected of any crime, the Municipal Economy and Information Technology Commission shall transfer the case to judicial authority.
For the legal representatives, directors, supervisors and senior management of the data trading venue who is responsible for the violation, the Municipal Economy and Information Technology Commission may, in accordance with the law, adopt regulatory measures and take joint disciplinary action, such as regulatory interview, incorporating into credit files for management and proposing imposing disciplinary action.
Chapter V Supplementary Provisions
Article 29
The Municipal Economy and Information Technology Commission shall be responsible for the interpretation of these Procedures.
Article 30
These Procedures shall be effective as of April 21, 2023 and be valid until April 20, 2025.