The ongoing 2023 Financial Street Forum Annual Meeting has shed light on the next step in capital market supervision trends in China. The China Securities Regulatory Commission is focused on promoting the deepening and solidification of the stock issuance registration system, accelerating the cultivation of domestic “smart funds”, and eliminating regulatory gaps and blind spots to prevent risks and maintain the smooth operation of the capital market.
The stock issuance registration system reform in China was initiated in November 2018, and after being piloted on the Science and Technology Innovation Board, GEM, and Beijing Stock Exchange, the full implementation was officially carried out in April 2023. The Chairman of the China Securities Regulatory Commission, Yi Huiman, emphasized that the registration-based reform is not intended to relax supervision, but rather to achieve a better combination of effective markets and promising governments. This includes improved transparency in the issuance review and registration process, enhanced supervision covering the entire chain before, during, and after events, and overall strengthening of the capital market’s basic system and rule of law.
The China Securities Regulatory Commission has taken several measures to ensure the transparency and quality of the stock issuance review and registration process. More than 90 companies have been inspected on-site, and various supervisory measures have been taken against securities companies and responsible persons engaged in investment banking business. Moreover, the Commission has stepped up efforts to investigate and deal with information disclosure cases such as financial fraud by listed companies, handling 228 cases of financial fraud since 2019.
In addition to further strengthening supervision, the China Securities Regulatory Commission is studying and formulating a policy framework for building a modern capital market with Chinese characteristics. This includes implementing measures to enhance the stability of medium and long-term funds to participate in equity investments, such as reducing risk factors for equity asset investment of insurance companies.
Yi Huiman stressed the importance of promoting the reform of the investment side and accelerating the cultivation of domestic “smart funds”. This will involve optimizing institutional structures, guiding institutions to make counter-cyclical investments and sales layouts, and establishing a benchmark for long-term value investment in the asset management industry. The goal is to expand management efficiency and boundaries, promote long-term assessment mechanisms, and incentivize long-term investment.
Furthermore, the China Securities Regulatory Commission aims to eliminate regulatory gaps and blind spots by strengthening cooperation with public security and judicial authorities, improving anti-counterfeiting and anti-counterfeiting systems, and cracking down on illegal activities such as financial fraud and market manipulation. This includes bringing all types of securities activities under supervision, strictly controlling access to private equity funds, and cleaning up and rectifying gold exchanges and “fake gold exchanges”.
The thorough and comprehensive measures taken by the China Securities Regulatory Commission demonstrate its commitment to promoting the deepening and solidification of the stock issuance registration system, improving capital market quality and efficiency, and safeguarding the stability and integrity of the market. As the Commission continues to implement these initiatives, it aims to boost investor confidence and maintain the smooth operation of the capital market.