.jpg)
Recently, the Shanghai Stock Exchange (SSE) has made initial progress in the development of the company profile system, as the project has been officially put into operation online. In recent years, the China Securities Regulatory Commission (CSRC) has repeatedly stressed the need to firmly grasp the development opportunities created by the innovation in information technology and improve the level of regulatory technology (RegTech). In accordance with the requirement, the SSE has, with the guidance and support of the CSRC, accelerated efforts in the RegTech for companies. The company profile system put online this time has been designed to help regulators quickly and comprehensively understand and master a company's situations and find the potential risks of a company in a more timely and effective manner, and assist the personnel in charge with the review of the periodic reports, thus resulting in a useful practice in empowering the regulation with technology.
1. Building a regulatory aid platform characterized by both professionalism and universality
In the context of more and more listed companies and increasingly intensified regulatory complexity, the traditional regulatory methods have found it difficult to meet the existing demands. Breaking through the bottlenecks and innovating in regulatory methods through technological means can solve the problem of insufficient regulatory resources and improve the efficiency of the regulatory work. Since the beginning of the project development, the company profile system has been aimed at the integration of professionalism and universality, so as to realize the auxiliary function in regulation of companies.
The professionalism and universality in the project development are mainly reflected in the following four aspects. First of all, in terms of the functions, the project development has closely followed the demands of frontline regulation. Different from most information terminal software products on the market, the company profile system, independently developed by the SSE, focuses on meeting the needs of regulatory functions and providing real-time intelligent assistance for the regulation. Secondly, in contents, the concepts of classified regulation and industry regulation have been implemented consistently. Based on the requirement for “grasping both ends to drive the middle”, the development of the profile system takes advantage of the supportive technologies such as big data and text mining, and provides scientific and technological assistance for follow-up regulation and services by carrying out classification, highlighting the key points, finding excellent companies and revealing risky companies. Thirdly, with regard to project staffing, the frontline regulators and the specialized technical teams work closely together to ensure the professionalism of the project development and complement each other’s advantages. In terms of team members’ experience, there are both backbone members and young forces so as to get well prepared for the subsequent training of personnel and improvement of teams. Fourthly, regarding the openness, at the early stage of designing, it was considered to open the system to the users with different needs, so as to achieve sharing of resources. The users can easily log in with a user name and password on a network that meets security requirements, thus making communication and exchange more convenient. With respect to the technical architecture, the expansibility of user types and application scenarios is also considered.
2. Striving for effectiveness with focus on the three major regulatory support functions.
In accordance with the principle of “safe foremost and demand-oriented”, the company profile system prioritizes the establishment of three major functional modules: “Snapshot of Company”, “Risk Scanning” and “Financial Report Review”.
The “Snapshot of Company” module effectively integrates information and data related to the regulation of a listed company. With the orientation toward serving the regulatory demands, the module provides descriptions in nine aspects, including regulatory records, analysis of key indicators, stock price and major company events, shareholders and key personnel, business and financial information, industrial comparison and analysis, capital operation information, external evaluation information, and company relationship charts, presenting a "panorama" of the company. Through the multi-dimensional, full-history and visualized display of the company information, the module helps the personnel in charge quickly understand a company's past and present, and rapidly focus on important issues of the company, and enables the regulators to grasp a company’s situations in a more in-depth and extensive manner.
The “Risk Scanning” module sets more than 80 risk labels in the 7 aspects of financial performance risk, company operating risk, corporate governance and compliance risk, shareholder and key personnel risk, public opinion-related stock price risk, capital operation risk, and corporate bond risk, as well as the business rules for more than 160 circumstances that trigger the early warning, so as to conduct the identification, determination and early warning for a company's risks. In terms of the data sources, the module not only selects the basic data provided by external suppliers and disclosed information, but also integrates the original data of information disclosure accumulated for years in the process of implementing the XBRL at the SSE, as well as other internal regulatory data and materials. According to the specific needs of daily regulation, the system sets different warning signs, including both continuous reminders for long-term risk issues and timely warnings for rapid response situations, with both significance and timeliness taken into consideration.
With the aim of identifying financial frauds and financial irregularities, the “Financial Report Review” module sets 78 labels related to asset quality, profitability and operation status, and more than 200 early warning rules, so as to achieve full coverage of the auto-review for regular reports of the SSE-listed companies. Relevant early warning labels will be dynamically updated with the increasing disclosure of the companies in the same industry, so as to ensure the accuracy in information presentation. With the system automatically reviewing various financial indicators, the personnel in charge can quickly lock up the hidden risks in a company's periodic report, thus reducing the pressure on manual review. According to the test for the review of the 2018 annual reports, the review briefings automatically generated by the system cover nearly 60% of the questions raised in the inquiry letters.
3. Accelerating replacement of technologies and enhancing data support and functional upgrades.
The SSE coordinates the formulation of the RegTech plan for companies based on the step-by-step arrangements. The company profile system has been put online, and in the future we will continue to concretize the individual regulatory experiences into rules and systems. It takes a lot of effort to succeed in the task. Going forward, we will replace and upgrade the system functions in the following three aspects.
We will further correct and improve the functional modules. In the contents, we will further optimize the contents and thresholds of the early warning indicators according to regulatory practices, market developments and changes in rules, so as to achieve continuous replacement and upgrading. At the same time, we will reserve enough room for the technological arrangements for other application scenarios. Specifically, we will focus on the following aspects. First of all, we will continue to improve the early warning system of industrial operation indicators, summarize the experience in industry regulation, and analyze and incorporate more industrial operation indicators. Secondly, we will strengthen the function of public opinion monitoring, and provide the users with more useful information in the analysis of intensity degree. Thirdly, we will further increase the coverage of the early warnings for the financial indicators in the annual reports, and improve the accuracy of the system’s risk warnings based on the analysis and summary of the typical cases in the past and the risky companies. Fourthly, we are considering adding the auxiliary module of review for M&A and reorganization, so as to achieve the intelligent risk screening.
We will make the system more user-friendly. For users with different needs, we will improve the display and collection of the information for companies regulated, regulatory teams, SSE-listed companies and even the entire market. To a certain extent, we will explore the opening of the basic functions of the profile system on the mobile APP, so as to provide real-time information and assistance for regulation. In the future, we are likely to open some functional modules such as the public opinion-related stock price monitoring to the companies, which may quickly take countermeasures, with the regulation and service integrated.
We will further enhance the support for regulation. At present, the company profile system put online runs independently, and has realized the dynamic exchange of data with the regulation system. In the future, the two-way transmission of information between the profile system and the regulation system will be realized in the function setting and technical feasibility, with the real-time interaction providing support for the business. We will give further play to the role of technology, improve the database and algorithm, strengthen the intelligent functions such as big data operation, machine learning and semantic analysis, and enhance the ability to discover, analyze clues and issue early warnings. We will continue to deepen the integration of artificial regulation and RegTech, and strive to realize more regulatory assistance functions, so as to improve the real-time degree and effectiveness of regulation.
