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The business rules of stock exchanges are an important part of the standard operation of capital markets. SZSE makes great effort to implement General Secretary Xi Jinping's major expositions on comprehensively advancing the law-based governance of China. Besides, we attach great importance to the construction of our business rules system, continue to improve the basic systems of the capital market, and constantly improve the level of law-based market governance and supervision.
In 2018, SZSE took the initiative to adapt to the development and changes of the market and supervision situations. By focusing on the 3 main tasks of strengthening weaknesses, preventing risks and facilitating reforms, we have formulated or revised 34 business rules, completed the 14th dynamic cleanup of business rules, and abolished 21 outdated business rules with the issuance of the 10th catalogue of abolishment. Up to now, there are 193 current business rules on SZSE, all of which are released on the official website and updated in a timely manner to ensure that the supervision basis and standards are open, transparent and standardized.
Speed up the system weakness strengthening for front-line supervision to consolidate the foundation
SZSE took the opportunity of the implementation of the revised Measures on Administration of Stock Exchanges to comprehensively sort out and strengthen system weaknesses to build a solid and strong system foundation for front-line supervision.
First, SZSE further improved the governance and operation level, amended the Charter, comprehensively strengthened party leadership, intensified front-line supervision functions, and optimized the internal governance structure. Second, we strengthened the supervision of listed companies, clarified the implementation basis of supervision measures such as on-site inspections and punitive damages, and revised the business guideline for the information disclosure of high-risk companies before disclosure. Third, we strengthened members' responsibility for the management of clients' transaction behaviors and promoted the establishment of the "member-regulation-oriented" transaction behavior regulation model. Fourth, we revised the basic rules for bond supervision, expanded the scope of supervision, enriched the means of supervision, and implemented the principle of "supervision upon application". Fifth, we optimized supervision measures and internal relief systems, clarified the factors and implementation levels of punishments for violations, broadened the scope of hearing review matters, and made the supervision system more stable and transparent.
Perfect the market risk prevention and control system to prepare for accidents beforehand
SZSE put risk preventing and resolving and stable market operation maintaining in a prominent position, promoted the establishment of an institutional system that was compatible with the market risk prevention and control situations in accordance with the principles of marketization and rule of law, and resolutely prevented and controlled major financial risks.
First, SZSE prevented and resolved stock pledge risks, supported the risk alleviation of market participants, improved the stock pledge repurchase mechanism, and helped private enterprises solve financing difficulties. Second, we improved relevant rules for risk prevention and control of member's transactions, strictly guarded against the risks of stock pledge repurchase, and strengthened the management of key account monitoring. Besides, we promoted the implementation of the northbound trading penetration mechanism for the Shenzhen-Hong Kong Stock Connect program, and strengthened the transaction supervision of the Shenzhen Stock Connect. Third, we established and improved the credit risk management system over the duration of bonds and asset-backed securities.
Deepen basic system reforms in key areas in a fast and stable manner
By adhering to the principle of "promoting reforms under the rule of law and improving the rule of law in reforms", SZSE further strengthened the system construction for reforms in key areas to ensure that there was a basis for every market reform and innovation.
First, we promoted the basic system reform in areas of the capital market such as forced delisting for major violations of law, trading suspension/resumption and share repurchase, standardized the behaviors of high-ratio bonus issue and stock dividend distribution. Besides, we optimized the market ecology and facilitated the high-quality development of listed companies. Second, we issued the specific institutional arrangements for the listing of "Belt and Road" bonds, green bonds and poverty alleviation bonds, so as to further play the exchange's role to serve national strategic deployments. Third, we provided an institutional guarantee for the launch of the H-share "full circulation" pilot project and accelerated the reform and opening up of the capital market in the new era. Fourth, we launched pledged bond repos and issued guidelines for the fund liquidity services to further enhance market liquidity.
General Secretary Xi Jinping's important speeches at the Central Economic Work Conference and the 13th Collective Studies of the Political Bureau of the CPC Central Committee have clarified the general program for the reform and development of capital markets and provided a basis for the system construction of exchanges. In 2019, SZSE will improve its systems by closely focusing on the requirements of "building a standardized, transparent, open, dynamic and resilient capital market". We will implement new development concepts, continuously improve the basic systems for the capital market. For the quality improvement of listed companies, we will steadily promote ChiNext reforms, enhance the SZSE market's inclusiveness and coverage, and improve our ability to support the development of technological and innovative companies and serve the real economy. For trading system improvement, we will continuously improve the trading mechanism and improve the trading arrangements for the Shenzhen-Hong Kong Stock Connect, so as to strengthen the whole-process supervision of transactions. For product system optimization, SZSE will continue to do a good job in the system preparation for the stock option pilot project and constantly improve the rules system for bonds, asset-backed securities and fund products to further enrich its product portfolio. In short, SZSE will solidly promote the construction of rules and provide a more solid institutional guarantee for its active duty performance.
