The development of securities markets in China since the commencement of the opening and reform of China inevitably led to the establishment of a centralized market regulatory body.

In 1992, the State Council Securities Commission (the "SCSC") and the China Securities Regulatory Commission (the "CSRC") were established. The SCSC is the State authority responsible for exercising centralized policy making. The CSRC is the SCSC's executive branch responsible for conducting daily supervision and regulation of the securities markets in accordance with the law.

The scope of the authority of the SCSC and the CSRC gradually expanded with the growth of the securities markets. In November 1993, the State Council decided to charge the SCSC with the responsibility of the test operation of the futures market to be carried out by the CSRC. In March 1995, the State Council formally approved the Organizational Plan of the China Securities Regulatory Commission thereby confirming CSRC to be a deputy-ministry level unit. CSRC was authorized to conduct supervision and regulation of the securities and futures markets in accordance with the law. In August 1997, the State Council decided to put the securities markets in Shanghai, Shenzhen and other cities under the supervision of the CSRC. Meanwhile, offices of the CSRC commissioners were set up in the two municipalities. In November 1998, the Central People's Government held the National Finance Conference and decided to reform and reorganize the national securities regulatory mechanism. The local securities regulatory departments will be supervised directly by CSRC. Organizations engaged in securities formerly supervised by the People's Bank of China were put under the centralized supervision of the CSRC.

In April 1998, pursuant to the State Council Reform Plan, the SCSC and the CSRC were merged to form one ministry level unit directly under the State Council. Both the power and the functions of the CSRC have been strengthened after the reform. A centralized securities supervisory system was thus established.

In September 1998, the State Council approved the Provisions regarding CSRC's Functions, Internal Structure and Personnel, further confirming CSRC to be one of the enterprise units directly under the State Council and the authorized department governing the securities and futures markets of China. This strengthened and clarified the CSRC's functions.