China's latest move to sharply raise rewards for whistleblowers will effectively improve the integrity and transparency of its securities and futures markets, analysts said, as authorities step up efforts to address misconduct and boost investor confidence.

The China Securities Regulatory Commission, the country's top securities regulator, together with the Ministry of Finance, unveiled a proposal earlier this week to raise cash incentives for individuals providing credible tipoffs on serious violations.

The maximum reward in eligible cases has been raised to 1 million yuan ($140,460) from 100,000 yuan.

The proposal would lift whistleblower rewards to 3 percent of fines and confiscations in each case, up from the current 1 percent, the regulatory commission said in a statement.

By significantly raising the stakes for tipsters, the government aims to deter market malpractice ranging from insider trading to fraudulent disclosures.

Market watchers said the policy will help create a fairer and more disciplined trading environment, ensuring that listed companies and market participants operate under stricter compliance standards.

Hu Guopeng, chief analyst at Sealand Securities, said that in the longer term, this could reduce systemic risks, strengthen investor protection, and support the healthy functioning of China's capital market as it strives to attract more long-term domestic and foreign investment.

Qin Tai, chief macroeconomic analyst at Huajin Securities, said that by offering stronger protection and incentives, China signals that its capital markets are maturing and increasingly compatible with international standards of transparency and accountability.

Highlighting that this move reflects policymakers' intent to empower investors, Qin said it will encourage public participation in market oversight, which will not only strengthen deterrence against misconduct, but also help foster a culture of integrity in which investors feel more protected and engaged in the system.

According to the CSRC, the proposed rules also refine the reward criteria. Major cases that severely disrupt the order of the securities and futures markets, seriously endanger financial security, or gravely infringe upon investors' lawful rights and interests are now included in the scope of rewardable cases.

Anonymous whistleblowers who provide supplementary materials as required, as well as whistleblowers who have played a secondary or assisting role in the violations, may also be granted rewards if they meet the criteria, according to the statement.

Ding Rijia, a professor of economics at China University of Mining and Technology-Beijing, said that while the proposed rules would strengthen deterrence, regulators must also guard against possible overreactions in the market.

"If investors interpret rising whistleblower cases as a sign of hidden risks, it could unsettle sentiment in the short term," he warned, adding that careful communication will be needed to balance strict oversight with market stability.

China has been steadily expanding the institutional opening-up of its capital market during the 14th Five-Year Plan (2021-25) period. The number of foreign-controlled securities, funds and futures firms has risen significantly, with the CSRC approving 13 new entrants in these sectors.

The number of Qualified Foreign Institutional Investors, or QFIIs, had expanded to 907 by the end of August, with their holdings of Chinese shares valued at 949.3 billion yuan, according to the CSRC.

According to the newly disclosed data for the second quarter of 2025, the total market value of northbound funds, or overseas capital flowing into A shares via stock connect programs linking the Shanghai, Shenzhen and Hong Kong exchanges, has reached 2.29 trillion yuan, up more than 2 percent from the previous quarter.

zhongnan@chinadaily.com.cn