Transform government management, reinforce foundation for development

Since 2016, simplifying administration, delegating power and supervising transformation are important events to the development of securities market. China Securities Regulatory Commission has canceled a number of administrative examination and approvals, simplified and optimized service process, strengthen the regulation of information disclosure of listed companies, cracked down insider trading and fraud issuance and other violative behavior, further promote the transformation of market regulation.

In an interview with China securities journal reporter, an expert said that this year, securities regulation transformation work was quite productive, laid a more solid foundation for the long-term stable and healthy development of capital market through improving regulation and information disclosure transparency. In the future, under the existing policy layout, the normalization and stabilization of supervision should be realized, pushing forward reforms in policy level and market level, promoting the securities market playing a greater role in the economic transformation and development.

Regulatory transformation and delegating administration complement with each other

Under the decision made by State Council on streamlining administration and delegating power, combining management and optimizing services, this year, the CSRC has taken more steps to streamline administration, delegate power and transform supervision. In April, CSRC canceled a number of approvals including “the approval of selected legal representatives and managers engage in operations and regulatory compliance of public funds, and canceled 7 items of administrative examination and approval for intermediary service. On May 1, CSRC and its dispatched institutions issued the securities and futures business institutions with a unified license, which included 10 items in securities, funds and futures area.

The regulatory transformation and the delegating administration complement with each other. With the concept of legal, strict and comprehensive supervision, the CSRC has made a comprehensive deployment of supervision. In the process of canceling the above administrative examination and approval items of intermediary services, in order to transit successfully, CSRC has made clear of management and work arrangement after the cancellation. According to the principle of prudent supervision, through the formulation management norms and standards, improve the means of regulation, increase inspection in process and penalties afterwards, to strengthen the protection of investors and relevant supervision and administration of business activities.

Securities regulatory commission this year has amend Regulatory rules of risk control indicators of securities company, the measures for the administration of assets reorganization of listed companies, provisional regulations on private asset management business in securities and futures companies, regulations for subsidiaries of fund management companies, interim measures for the futures investor protection fund management, and a series of rules and regulations, to implement comprehensive supervision on market participants of all kinds, keep our capital market develop in a stable and healthy way.

Wu Xiaoqiu, director of the Institute of Finance and Securities at Renmin University of China, praised CSRC for its recent regulatory transition. He argues that, supervision should pay more attention on information to be disclosed by stock assets (listed companies) and to-be-listed companies, and strengthen legal regulation on insider trading, market manipulation and fraud listing.

Market transparency is the focus

In terms of the implementation effect, it is obvious that simplifying regulation, delegating power and regulation transformation promotes supervision efficiency and market transparency. Tian Lihui, professor at the Institute of Financial Development at Nankai University, said that the CSRC's work this year can be reflected in four aspects. The first is the change of the regulatory philosophy, made it clear that the focus of CSRC is to strengthen supervision. Second, the securities market has achieved a relatively stable development. It has carried out concrete practices such as the delisting of Xintai Electric Co., and earnestly strengthened supervision and conscientiously implemented the existing rules. Third, the CSRC's series of work attached more importance to supervision. Fourth, CSRC implemented supervision seriously, saw the disclosure of information as a top priority, made rules clear through a variety of means, took practical steps to perfect information disclosure, and punished some companies. These measures are highlights for this year, promoting market efficiency.

With legal, strict and comprehensive supervision, simplifying administration and delegating power has helped protecting the interests of small and medium-sized investors. Take administrative punishment right awarded to dispatched offices for example, CSRC said that, at the end of the quarter since October 2013, when the administrative punishment right was awarded to dispatched offices, they have done much - confiscated nearly 140 million yuan in these two years. The CSRC, on one hand, optimizes the handling procedures of dispatched agencies, and changes the record of the record to the post facto record. On the other hand, reinforce instructions to dispatched agencies on litigation cases and administration punishment, reply to their consultations through research, on-site guidance and case-study, as well as listen to their suggestions to ensure consistency, unity while enforcing the law. CSRC said that by granting administrative penalty rights to dispatched agencies, it effectively promoted the integration of regulatory resources and laid positive foundation for the construction of a comprehensive and multi-level administrative penalty enforcement system.

It is a very good attempt. Local securities regulatory bureau know more about behaviors of local listed companies and intermediaries. Dong Dengxin, director of Institute of Financial Securities at Wuhan University of Science and Technology, said that part of CSRC’s regulatory responsibilities would be devolved to dispatched agencies, which can take advantages of local securities regulatory bureau, helping to enhance the transparency of the market and the ability to develop steadily and healthily.

The responsibility of regulators, said Wu Xiaoqiu, is the market's scavenger, whose focus is supervision on information disclosure and improving market transparency. He thought that one of the characteristics of China's capital market in five years is high transparency with good market value basis. If the market is not transparent enough, there is not much room for appreciation, and it is unrealistic to be a global asset trading center or a wealth management center. Therefore, to build China's capital market into an important global financial center, the market legal system should be complete with sufficient transparency and market assets with ability to grow.

reform and system construction are indispensable

In the context of streamlining administration, delegating power and supervision transformation, market reform and system construction are indispensable.

The research group of China (Hainan) reform and development research institute points out that the transformation of financial supervision is at a historical point. Whether to boost economic confidence or speed up economic transformation and upgrading, it will depend on a healthy and stable capital market, and an executive plan for both the symptoms and the root causes. At the same time, regulatory transformation has reached deep transformation of administrative power structure adjustment, suggesting the urgency and feasibility of fully considering the regulation transformation, adjusting and optimizing the market regulators as soon as possible, an effective guarantee. Chi Fulin China (Hainan) reform and development research institute believes that in the next few years, to adapt to the demand of the market, to form a new model of rule of law, are important path choice of regulation transformation. Regulatory transformation is a long-term process, and the key is to take good and right steps, which is crucial to the long-term regulatory transition.

Wu said that a series of rules and regulations must be adjusted. We must promote the reform of China's financial structure, or there is no room for capital market development.

Regulation needs to be normalized and stable. CSRC needs to push forward reform with clear, solid and steady pace. Tian Lihui suggested that, we should maintain the current stable policy layout, and let some reforms follow the due model and gradually advance based on existing conditions.

Ultimately, transforms must come from institutional level. Dong Dengxin said, rules of the securities market is the most fundamental, the rules will develop participants of the same kind, including traders and agents. He suggested that the CSRC's next step would be to decentralize the IPO approval authority to the exchanges, so that the primary market can realise de-administration. At the same time, stock market is the most important place for resource allocation, the most marketized place, of which should be taken full advantage. Especially in the context of overcapacity, merger and acquisition pushing forward, we should promote marketization of the securities market, and let market mechanism play its role.