Major Events in the Capital Market
On June 13, the 11th Lujiazui Forum (2019) was held in Shanghai. As China’s top financial forum, this time China’s top financial executives “top match” appeared in Shanghai, releasing a major signal of China’s economy.
The high-profile Science and Technology Innovation Board chose to drop the hammer at this forum. Liu He, member of the Political Bureau of the CPC Central Committee and vice premier of the State Council, Li Qiang, member of the Political Bureau of the CPC Central Committee and secretary of the Shanghai Municipal Party Committee, Yi Huiman, chairman of the China Securities Regulatory Commission, and Ying Yong, mayor of Shanghai, jointly opened the board for the Science and Technology Innovation Board.
Photo by Zhang Hengwei, China News Agency
Liu He delivered a keynote speech at the forum. He said that we must follow the purpose and original intention of establishing the Science and Technology Innovation Board, use the Science and Technology Innovation Board to drive the reform of the entire capital market, cultivate more technological innovation companies, and help economic transformation and upgrading. At the same time, pay attention to advancing with the times, constantly creating conditions in exploration, and constantly improving in solving problems.
“We are just beginning now.” Liu He said that the key to the construction of the Science and Technology Innovation Board is to have a transparent legal environment, a good credit foundation, standardized operations, listed companies with good development prospects, and qualified investors.
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Liu He pointed out that the most important thing is to do two things well at present:
The first is to implement the reform of the registration system centered on information disclosure. The reform from the approval system to the registration system is of great significance to the development of my country’s capital market. Its essential meaning is to truly give the option to the market. To implement the registration system, the core is to enhance information disclosure, increase transparency, minimize unnecessary administrative intervention, allow investors to make independent value judgments, pay more attention to future growth, and pay more attention to long-term investment value, so that listed companies can accept strict market regulations. Choose, and finally launch a batch of better listed companies.
The second is to improve the rule of law, increase the cost of breaking the law, and strengthen law enforcement. To implement the registration system, there must be transparent, strict, and predictable legal and institutional conditions, and cultivate more professional intermediary agencies, so that all parties can bear their due responsibilities, and all kinds of fraudulent accounting, lying, internal transactions, etc. We must resolutely crack down on illegal acts that deceive the market, comprehensively increase the cost of violations, and resolutely safeguard the public interest.
As the co-rotating chairman of this forum, Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, talked about eight major points in his speech.
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—— “If we really want to do a good job in financial services and build a world financial center, the most important thing is always to put the interests and concerns of customers first.”
—— “We warmly welcome the participation of foreign financial institutions. We will further expand the opening up of banking, insurance, securities, and trusts. We especially welcome experienced asset management institutions to raise RMB funds with their Chinese counterparts and invest in the RMB securities market.”
——At present, credit accounts for more than 80% of the financial financing structure, which is too high. The excessive reliance of enterprises on banks does not match well with the life cycle and production cycle of enterprises. “We must work together to vigorously develop the capital market and completely change the imbalance between direct financing and indirect financing, where one leg is short and the other leg is long.”
——Insufficient corporate governance has always been our internal hidden danger. “Some major shareholders regard financial institutions as cash machines, and some executives act as insiders. Since most financial institutions have strong public interest-related attributes, establishing a modern enterprise system and strengthening the leadership of the party must be consistent. , forming a mechanism in which various corporate governance agencies actively cooperate and restrict each other.”
——Let violators of laws and regulations be punished sufficiently and severely in a timely manner. “The cost of breaking the law is too low, which can only encourage the continuous spread of trampling on the law. The regulatory authorities must dare to fight against this, strictly enforce the law, and resolutely defend the dignity of laws and regulations.”
——We must vigorously develop various institutional investors such as public offerings, private placements, insurance, trusts, and wealth management. In particular, we must learn from the experience of other countries in terms of pensions and build three pillars of basic social security, enterprise annuity, and commercial insurance.
——Resolutely prevent the resurgence of structurally complex products, improve the efficiency of capital use, and solve the problem of turning the real into the virtual, and make great efforts to clean up the idling funds in the financial system.
——We must face up to the financialization of real estate in some places. “Some real estate companies’ excessive financing has squeezed credit resources, resulting in a further reduction in the efficiency of capital use and fueling real estate investment speculation.”
Yi Gang, Governor of the People’s Bank of China, pointed out that in the next step, the People’s Bank of China will fully support Shanghai in completing the three major tasks entrusted by the Party Central Committee in the new era, focusing on the following matters:
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The first is to support the establishment of an integrated account system in domestic and foreign currencies in the new area of the Shanghai Free Trade Zone, and implement a more convenient cross-border capital management system.
The second is to continue to improve the inter-bank foreign exchange market and bond market, enrich the types of foreign exchange option products, expand market participants, and support the development of Silk Road-themed bonds.
The third is to support the cooperation between the Shanghai Gold Exchange and the Chicago Mercantile Exchange, and launch derivatives based on “Shanghai Gold” on the Chicago Mercantile Exchange.
Fourth, support international financial organizations to set up offices in Shanghai, and foreign-funded financial institutions to set up subsidiaries in Shanghai.
The fifth is to support the establishment of a cross-regional financial cooperation platform in the Yangtze River Delta region, strengthen the interconnection of financial infrastructure in the Yangtze River Delta region, and promote the integration of financial services in the Yangtze River Delta region.
Sixth, support the construction of Shanghai Science and Technology Innovation Center and drive the development of the G60 Science and Technology Innovation Corridor. Support Shanghai’s financial open innovation policy to apply to the G60 Science and Technology Innovation Corridor, and improve the financial services of science and technology innovation enterprises.
Seventh, support the Shanghai Commercial Paper Exchange to promote the billing of accounts receivable in the Yangtze River Delta region, and pilot the promotion of the discount service.
The eighth is to support the pilot program in Shanghai to cancel the upper limit on foreign shareholding ratios of securities companies and fund management companies, expand the business scope of foreign-funded financial institutions, and fully support the construction of the Shanghai Science and Technology Innovation Board.
Ninth, further enrich and improve the functions of the Shanghai headquarters of the People’s Bank of China.
Yi Huiman, chairman of the China Securities Regulatory Commission, said at the opening ceremony of the Science and Technology Innovation Board that the establishment of the Science and Technology Innovation Board and the pilot registration system are important breakthroughs in comprehensively deepening the reform of the capital market. , Science and technology innovation enterprises with high market recognition will develop and grow. The second is to play the role of reform experimental field.
Photo by Zhang Hengwei, China News Agency
In the next step, the China Securities Regulatory Commission will focus on the four key points that Vice Premier Liu He needs to grasp on the construction of the Science and Technology Innovation Board, especially the implementation of the registration system reform with information disclosure as the core, as well as improving the legal system, increasing the cost of breaking the law and The two aspects of supervision and law enforcement require great efforts and painstaking efforts to fully promote their implementation. Effectively establish a regulatory concept centered on information disclosure, comprehensively establish a strict information disclosure system, improve the market incentive and restraint mechanism, tighten the responsibilities of intermediary agencies, and provide investors with a real, transparent, and compliant listed company. At the same time, actively promote the increase of judicial supply, significantly increase the cost of violations of laws and regulations, severely crack down on false disclosure, fraudulent issuance and other chaotic phenomena, and purify the market ecology.
Yi Huiman said that in the near future, the China Securities Regulatory Commission will successively launch a package of pragmatic measures for opening up. The first is to promote the revision of the QFII/RQFII system rules to further facilitate the participation of foreign institutional investors in China’s capital market. The second is to allow overseas shareholders of joint venture securities and fund management companies to realize “one participation and one control” in accordance with the principle of consistency between domestic and foreign capital. The third is to reasonably set the qualification requirements for controlling shareholders of comprehensive securities companies, especially the requirements for net assets. The fourth is to properly consider the asset size and business experience of the parent bank of foreign-funded banks, and relax the restrictions on the access of foreign-funded banks to engage in securities investment fund custody business in China. The fifth is to comprehensively promote the reform of “full circulation” of H shares. Sixth, continue to increase the opening of the futures market and expand the scope of specific varieties. Seventh, the restrictions on private equity products managed by foreign-funded private equity securities investment fund managers to participate in “Hong Kong Stock Connect” transactions shall be lifted. The eighth is to study and expand the opening of the exchange bond market to the outside world, and expand the channels for foreign institutional investors to enter the exchange bond market. Ninth, study and formulate management measures for exchange panda bonds to facilitate bond issuance and financing by overseas institutions.
Yi Huiman said that while further opening up to the outside world, we will insist on opening up, seeing clearly, and managing it, and continue to improve risk prevention and cross-border supervision capabilities. At present, the global financial market is highly interconnected, and risks are easily cross-infected and even jointly resonated among different economies. This is a common challenge faced by capital markets and regulatory agencies in all countries. We will strengthen cooperation with regulatory counterparts in various countries and international organizations to jointly prevent and respond to various risks. In the process of opening up, we will continue to improve the risk monitoring and early warning mechanism, make a good prevention and response plan for imported risks, effectively maintain the normal order of cross-border investment and financing activities, and hold the bottom line of preventing systemic financial risks.
