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The year 2020 is the first year of the implementation of the new Securities Law and also a big year for SZSE in rules development. According to the overall plan of China Securities Regulatory Commission (CSRC), SZSE has earnestly practiced the principles of “system building, non-intervention, and zero tolerance” and followed the working requirements of standing in awe of the market, rule of law, professionalism and risks and pooling the efforts of all sides to develop the capital market. Using the implementation of the new Securities Law as an opportunity, SZSE has made great efforts to clear and optimize self-disciplinary rules, advanced “systematized, standardized, process-based, and electronic” regulation, and done a good job of adjusting relevant systems, regulation and services to suit the implementation of the new Securities Law, to actively create a new ecosystem that facilitates sound development of the capital market.
Since the beginning of the year, SZSE has formulated and revised 63 business rules and abolished 69. So far, SZSE has 243 business rules in 20 smaller categories under nine major categories by business field, and 68 guides on how to handle relevant services. Those rules and guides cover all market entities including issuers, listed companies, members, intermediaries and investors, as well as all products and services such as stocks, bonds, ABS, funds and options. The achievements indicate a solid step that SZSE has made in the establishment of a scientific, complete, transparent, efficient, and easy-to-use system of rules.
Comprehensively clearing low-level documents and “pocket policies” to make rules transparent and standard
Transparency is the basis of an exchange’s credibility and the foundation underlying all the efforts to build an exchange. SZSE has implemented the working concepts of openness, transparency, integrity and impartiality throughout the whole building process of the system of rules. This year, SZSE has launched low-level document standardization and clearing work such as regulatory Q&A and memorandums across the board. Specifically, on the basis of getting a clear picture of base numbers, SZSE has classified the work and advanced it step by step, upgrading rules that contain substantive regulatory requirements into business rules, downgrading operating content into operating guides, and consolidating and integrating repetitive, scattered regulations.
The clearing work has produced fruitful results. So far, 92 regulatory memorandums for listed companies and more than ten regulatory Q&A and business notices in other fields have been abolished, and 23 business guides for listed companies, guidelines for innovative bond varieties No. 1 to No. 5 and two transaction guides have been released. SZSE will, according to the principle that those that should be cleared must be cleared, continue to sort out relevant regulations, solve problems in existing provisions while strictly controlling the number of new provisions, resolutely put an end to “pocket policies”, and eliminate “invisible thresholds”.
Vigorously promoting connection of rules to the new Securities Law and advancing systematized, standardized, process-based, and electronic regulation to make rules simple and efficient
The new Securities Law has confirmed the effectiveness of exchanges’ business rules and raised higher requirements on the standardization of business rules. As a result, a lot of supporting rules urgently need clearing and improvement. Over the past year, SZSE has concentrated on steadily advancing the establishment, revision and abolishment of rules, and has accomplished hard tasks through great efforts. SZSE has cleared and optimized more than 80 rules and provisions, sorted out and released the eleventh directory of abolished rules. SZSE is currently seeking public opinions on supporting rules for its delisting reform. SZSE has realized seamless connection to the new Securities Law step by step, and have basically completed the “building drawing” for optimization of rules that was made earlier this year.
In the implementation of the new Securities Law, SZSE has steadily advanced systematized, standardized, process-based, and electronic regulation, to further optimize regulatory services and enhance market entities’ sense of gain. We have formulated the “full-caliber” list. Based on the changes in the exchange’s functions under the new situation, we have formulated and released the list of 15 self-disciplinary regulation items and the list of 25 market service items to ensure strict compliance with rules and transparent work. We have brought “full-coverage” guides online. We have launched 29 business guides frequently-used by market entities and displayed them in a special column to make them easy to find and use. We have opened the “around-the-clock” system. We have promoted electronic, paperless business review across the board and embedded compliance requirements in internal provisions. The business system for review of issuance and listing on the ChiNext Board and the fixed-income business system are open 24 hours a day, seven days a week, making it more convenient for enterprises to apply for review and ask questions.
To consolidate and deepen the achievements of previous work, SZSE is actively revising and updating the compilation manual of business rules, while sorting out and summing up the workflow manual and coordination manual of specific business. Through those three manuals, SZSE will further define what work the exchange should do and how to do it, so as to continue to improve the quality and efficiency of regulatory services and raise the level of standardization.
Accelerating improving system supply in key fields to safeguard the reform
Since the beginning of the year, facing the new situation where the capital reform is deepened in all respects, SZSE has adhered to actively adapting establishment of rules to the needs of reform and development, and continued to strengthen development of supporting rules in key fields. SZSE has ensured effective, unified connection of rules establishment and system building with reform decisions, and given better play to the role of rules and regulations in promoting, standardizing and safeguarding reform and innovation.
SZSE has comprehensively advanced the building of supporting rules for the ChiNext Board reform and registration-based IPO system. SZSE has released eight main rules, 21 guidelines for detailed rules and 13 business guides which involve IPO review, refinancing and M&A and reorganization review, issuance & underwriting, continuous regulation and transaction, to ensure steady implementation of the reform. SZSE has strengthened the institutional foundation for high-quality development of listed companies. SZSE has deepened the reform of the delisting system, revised six rules including the Rules Governing Share Listing and the Trading Rules, and facilitated the formation of a market ecosystem in which companies can be both listed and delisted and only the fittest survive. SZSE has revised the guidelines for standard operation, and helped formed the long-acting mechanism for standard governance of listed companies. SZSE has issued the administrative measures for risk classification of listed companies and the evaluation measures for information disclosure, and advanced classified regulation and targeted regulation in depth. SZSE has made public the standard for disciplinary punishment of listed companies to improve regulatory transparency and predictability. SZSE has established and refined the product rules system. SZSE has formulated the business measures for publicly offered infrastructure REITs and its supporting guide, making institutional preparations for the steady implementation of the pilot project of publicly offered REITs. SZSE has rolled out the business rules for bond swaps and credit protection certificates, which has enriched the “toolkit” for bond market risk management and investment & financing. SZSE has revised the detailed rules for fund redemption, launched cross-bank market bond ETF, and optimized the ETF redemption mode across the Shenzhen, Shanghai and Hong Kong stock markets.
In the process of rules drafting, SZSE has attached great importance to openness and democracy in the establishment of rules. SZSE has sought public opinions on 28 important rules through its official website, business section, seminar and email, and has fully listened to the voice of the market, absorbed and adopted reasonable advice to ensure its rules and systems are accepted and recognized by the market.
Drawing a simple, clear blueprint for the system of rules from a long-term perspective
Advancing in depth regulation and market governance in accordance with laws and building a quality innovation capital center and world-class exchange cannot be achieved without a high-quality system of self-disciplinary rules. SZSE has actively integrated rules into the overall development plan. Centering on making rules “simple, clear, and easy to understand and use” and based on market demand, SZSE has given a lot of prospective thinking, made much system planning, and developed many practical measures to strive to build a market-friendly system of rules, with the spirit of following through one blueprint.
In the vertical direction, SZSE has clearly defined the hierarchy of rules. SZSE has further clarified the positioning of rules, streamlined the hierarchy of rules, and built a “three-level” system of rules with basic business rules such as issuance, listing, trading and member management rules at its core, business guidelines as its trunk and business guides as its supplement. In the horizontal direction, SZSE has broken up the whole into parts. SZSE has continuously evaluated and integrated fragmentary documents such as notices, combined different rules for the same matter, further reduced the number of rules, and formed an organic, unified system of rules with clear classification. SZSE has planned serial number management as a whole. On the basis of piloting the guidelines for information disclosure of listed companies, SZSE has gradually included product rules and business rules into serial number management to unify the form and make rules easy to find.
Rules are the very foundation of governance. A market that is complete with functions and runs efficiently is a collection of a series of effective systems, and improving systems is the basis and guarantee to maintain a healthy development of the market. This year marks the 30th anniversary of the founding of SZSE. Standing at a new starting point, SZSE will, under the unified leadership of CSRC, stick to the market- and rule-of-law-based direction, and continue to pursue progress while ensuring stability. We will adhere to a systematic concept, persistently advance the building of rules, and continue to enhance the accuracy, effectiveness, stability and predictability of self-disciplinary rules. We will make basic systems more mature and finalized, and the governance system more scientific and complete, leverage systems to promote the deepening of the reform of the capital market in all respects and the steady implementation of the major tasks of comprehensive authorization reform of the pilot demonstration zone of socialism with Chinese characteristics, and provide strong rule-of-law guarantee for the building of a quality innovation capital center and world-class exchange.
