Executive Order (EO) 14032 Trading Restrictions

Overview

The following contains information about securities with an Office of Foreign Assets Control (OFAC) hold pertaining to Chinese Military-Industrial Complex Companies (CMIC).

Background

On June 3, 2021, President Biden issued Executive Order 14032 (New EO) pertaining to Chinese Military-Industrial Complex Companies. The New EO supersedes EO 13959 (Prior EO), pertaining to Communist Chinese military companies, issued in November 2020.  The New EO prohibits purchases in publicly traded securities (and corresponding derivatives) of any company determined by OFAC to be operating in the defense or surveillance sectors of the Peoples Republic of China (PRC). The prohibition’s effective date is August 2, 2021.

OFAC published a list of 59 companies subject to the New EO called the Chinese Military-Industrial Complex List (CMIC List). 

To comply with the EO, E*TRADE will restrict trading in securities identified as in-scope for the EO beginning on July 30, 2021 ahead of the August 2, 2021 effective date.

Reference: Executive Order 14032 Addressing the Threat From Securities Investments That Finance Certain Companies of the People’s Republic of China

NON-SDN Chinese Military-Industrial Complex Companies List

Impacted Securities

To comply with the EO, E*TRADE will restrict trading in securities identified as in-scope for the EO on July 30, 2021.  However, many of the Firm’s counterparties will cease accepting orders sooner than the effective date.  The ability to liquidate may be limited by market conditions. 

Restricted on July 30, 2021
AERO ENGINE CORPORATION OF CHINA
AEROSPACE CH UAV CO., LTD
AEROSPACE COMMUNICATIONS HOLDINGS GROUP COMPANY LIMITED
AEROSUN CORPORATION
ANHUI GREATWALL MILITARY INDUSTRY COMPANY LIMITED
AVIATION INDUSTRY CORPORATION OF CHINA, LTD.
AVIC AVIATION HIGH-TECHNOLOGY COMPANY LIMITED
AVIC HEAVY MACHINERY COMPANY LIMITED
AVIC JONHON OPTRONIC TECHNOLOGY CO., LTD.
AVIC SHENYANG AIRCRAFT COMPANY LIMITED
AVIC XI'AN AIRCRAFT INDUSTRY GROUP COMPANY LTD.
CHANGSHA JINGJIA MICROELECTRONICS COMPANY LIMITED
CHINA ACADEMY OF LAUNCH VEHICLE TECHNOLOGY
CHINA AEROSPACE SCIENCE AND INDUSTRY CORPORATION LIMITED
CHINA AEROSPACE SCIENCE AND TECHNOLOGY CORPORATION
CHINA AEROSPACE TIMES ELECTRONICS CO., LTD
CHINA AVIONICS SYSTEMS COMPANY LIMITED
CHINA COMMUNICATIONS CONSTRUCTION COMPANY LIMITED
CHINA COMMUNICATIONS CONSTRUCTION GROUP (LIMITED)
CHINA ELECTRONICS CORPORATION
CHINA ELECTRONICS TECHNOLOGY GROUP CORPORATION
CHINA GENERAL NUCLEAR POWER CORPORATION
CHINA MARINE INFORMATION ELECTRONICS COMPANY LIMITED
CHINA MOBILE COMMUNICATIONS GROUP CO., LTD.
CHINA MOBILE LIMITED
CHINA NATIONAL NUCLEAR CORPORATION
CHINA NATIONAL OFFSHORE OIL CORPORATION
CHINA NORTH INDUSTRIES GROUP CORPORATION LIMITED
CHINA NUCLEAR ENGINEERING CORPORATION LIMITED
CHINA RAILWAY CONSTRUCTION CORPORATION LIMITED
CHINA SATELLITE COMMUNICATIONS CO., LTD.
CHINA SHIPBUILDING INDUSTRY COMPANY LIMITED
CHINA SHIPBUILDING INDUSTRY GROUP POWER COMPANY LIMITED
CHINA SOUTH INDUSTRIES GROUP CORPORATION
CHINA SPACESAT CO., LTD.
CHINA STATE SHIPBUILDING CORPORATION LIMITED
CHINA TELECOM CORPORATION LIMITED
CHINA TELECOMMUNICATIONS CORPORATION
CHINA UNICOM (HONG KONG) LIMITED
CHINA UNITED NETWORK COMMUNICATIONS GROUP CO., LTD.
CNOOC LIMITED
COSTAR GROUP CO., LTD.
CSSC OFFSHORE & MARINE ENGINEERING (GROUP) COMPANY LIMITED
FUJIAN TORCH ELECTRON TECHNOLOGY CO., LTD.
GUIZHOU SPACE APPLIANCE CO., LTD
HANGZHOU HIKVISION DIGITAL TECHNOLOGY CO., LTD.
HUAWEI INVESTMENT & HOLDING CO., LTD.
HUAWEI TECHNOLOGIES CO., LTD.
INNER MONGOLIA FIRST MACHINERY GROUP CO., LTD.
INSPUR GROUP CO., LTD.
JIANGXI HONGDU AVIATION INDUSTRY CO., LTD.
NANJING PANDA ELECTRONICS COMPANY LIMITED
NORTH NAVIGATION CONTROL TECHNOLOGY CO., LTD.
PANDA ELECTRONICS GROUP CO., LTD.
PROVEN GLORY CAPITAL LIMITED
PROVEN HONOUR CAPITAL LIMITED
SEMICONDUCTOR MANUFACTURING INTERNATIONAL CORPORATION
SHAANXI ZHONGTIAN ROCKET TECHNOLOGY COMPANY LIMITED
ZHONGHANG ELECTRONIC MEASURING INSTRUMENTS COMPANY LIMITED

The following companies were previously on the CCMC sanctioned list and are not included on the CMIC list. There are no OFAC restrictions for these entities. These securities may be traded, subject to market conditions.

DOD Original - Removed from NS-CMIC
Advanced Micro-Fabrication Equipment Inc. (AMEC)
Beijing Zhongguancun Development Investment Center
China Construction Technology Co. Ltd.
China International Engineering Consulting Corp
China National Aviation Holding Co. Ltd. (COMAC)
China National Chemical Corporation (ChemChina)
China National Chemical Engineering Group Co., Ltd. (CNCEC)
China Shipbuilding Industry Corporation
China State Construction Group Co., Ltd.
China Three Gorges Corporation Limited
Commercial Aircraft Corporation of China, Ltd.
CRRC Corp.
Dawning Information Industry Co (Sugon)
Global Tone Communication Technology Co. Ltd. (CNAH)
GOWIN Semiconductor Corp (GCAC)
Grand China Air Co. Ltd. (GTCOM)
Luokung Technology Corporation (LKCO)
Sinochem Group Co Ltd
Xiaomi Corporation

Functionalities Available Prior to Restriction Date

Prior to the restriction date, and subject to market conditions, customers may continue to hold and trade the affected securities.  Given the uncertainty about the length of the impending restriction, customers may choose to liquidate their positions in affected securities. E*TRADE will be restricting trading in the securities as of the dates noted above. However, market conditions may not permit customers to liquidate their positions.  Several market participants have indicated that they will cease trading in CMIC related securities after July 23, 2021.

Functionalities Available After Restriction Date

Once the restriction is entered, customers will not be able to enter new orders or liquidate positions in the affected securities.  The securities are not considered OFAC blocked property, will still belong to the customer, and will remain in the customer’s account in a restricted status. Customers may choose to transfer affected securities to another firm. Customers are permitted to receive dividends for the affected securities. E*TRADE will continue to restrict the trading of the security until we are no longer obligated to do so pursuant to U.S. law or executive order.

Divestment

Under the New EO, clients have until June 3, 2022 to divest the security to a non-US person, or for the case of entities to be designated in the future, 365 days from the date of designation.  The firm’s counterparties have ceased transactions in many of the sanctioned securities on or before the effective date. The Firm is exploring liquidation options for clients holding securities after the effective date. As of now we do not have guidance on how to treat the impacted securities of clients who continue to hold after the applicable divestment date.