To take precautions for the rising market with trading volume repeatedly reaching all time high, the Shanghai Stock Exchange (SSE) has recently summoned officials from member units to hold the "symposium of member units' senior management on safe operation and development planning for technical system of securities market".
At the symposium presided over by SSE Vice President Xie Wei, SSE Governor Geng Liang and President Zhu Congjiu introduced SSE's measures to guarantee the trading system's safety. Besides, they also set higher standards for member companies to further prevent market risks by continuous improvement of their technical systems.
Geng made at the symposium a keynote speech "Increasing Technology Investment and Level for Market Safety". Geng said that Premier Wen Jiabao, at the recent National Financial Work Meeting, made a judgment that China's financial work had undergone a historical change in recent 5 years, with a turning point in the capital market. 2006 was the best year for the development of the securities market. So far, the rectification for listed companies has almost been completed, with the equity division reform basically finished and more than 80% debt-clearing completed. As Premier Wen said, the next step, the establishment of a mature and modern capital markets, will be a major task and primary objective for China.
According to Geng, to judge the modernization of a market, 4 important indicators should be considered besides the most fundamental factors such as the law and system. First is the market trend. Last year, the SSE Composite Index increased by 134%, the largest increase in the world's major securities markets. Second is the trading volume, which indicates the market activity. The trading volume on the SSE in 2005 and 2006 were RMB1.9 trillion and RMB 6 trillion, respectively. But it has reached RMB1.2 trillion in only 14 trading days since 2007. Third is the market capitalization. Last year, the stock market capitalization on the SSE increased to RMB7,200 billion from RMB2,300 billion. This has greatly enhanced the SSE and even China's securities market's position on the world's capital market. Fourth is the financing capacity, which shows the securities market's contribution capacity to the national economy.
Geng pointed out that attention should be paid to potential risks on such an active market. Firstly, can the technical system and trading platform support such a large trading volume? According to Geng, to meet the tremendous trading increase resulting in the recent "trading block" on the market, the SSE's technology platform has been upgraded in due time. He explained that the SSE had already completed, in the previous years of market downturn, several major projects including the data warehouse, the New Generation Trading System and the new website. With 4 to 5 years' effort, the "heart" of the SSE's technical system was gradually upgraded. Meanwhile, the working system has undergone all-round improvement in terms of the volume, network, disaster recovery and equipment. Although the system can deal with the current market situation smoothly, the SSE, fully aware of the changeable market, will make all the necessary preparations to ensure the trading security and stability.
Geng stressed that China's current market is facing a golden development opportunity. The SSE should seize the opportunity to enhance its strength and expand its size as well as regulate the securities market. Meanwhile, it should pay great attention to the technology risks. Therefore, the SSE, while making efforts on its own work, puts forward 4 requirements for the member companies. First is to pay great attention to the market technology work. Second is to increase technology investment. Third is to speed up training for improvement of the technical staff' level. Fourth is to make full efforts to prevent market risks.
From the technical regulation perspective, Zhu also made requirements for the members. Zhu said that the development of China's securities market was accelerated. The listing of large-scale backbone enterprises of the national economy and the introduction of new products will greatly increase the pressure and complexity of the technical system. Therefore, it will be a pressing issue for the whole industry to perfect the technical system construction for the steady, healthy and rapid development of the market.
According to Zhu, information technology for the securities market will be related to the market efficiency, stability and health. He put forward 3 requirements for member companies from the perspective of enhancing technical system construction.,
Firstly, member companies should give high strategic concern to information technology, including the business strategy, the technology strategy and such systemic strategies as the structure building between the front end and the back end, securities companies and banks, stock exchanges and financial derivatives exchanges as well as exchanges and members.
Secondly, to reasonably and effectively combine the members' planning and the exchange's planning, the SSE will make some technical planning based on each member unit's suggestions so that the entire industry's technology can achieve common progress. In addition, the new trading system to be launched should have some innovations in its business function, which will need the cooperation of the member units to get the best results.
Thirdly, members should keep up with the updated technical system in the introduction of the exchange's new system. Any industry reforms need models to take the lead. When it comes to IT, leading securities dealers should be responsible to set examples for other securities companies.
According to SSE Technology Center official and Assistant to President Bai Shuo, member companies are required to be aware of their weaknesses to find out, investigate and prevent risks. To make up for their most fatal weaknesses at first, they should deal with emergencies first and make special plans for special issues.,/p>
Bai stressed that currently member companies should make and invest in long-term plans. Meanwhile, they should keep updated with the industry information, the successful cases of other units and relevant progress in IT area. Moreover, they should follow up the SSE's measures for improvement of the entire market's safe operation level and actively participate in various communication activities organized by the SSE for the sharing of experiences and lessons in various aspects.
Member units attending the symposium were 11 securities dealers including China Galaxy Securities Co., Ltd., Shenyin & Wanguo Securities Co., Ltd., Guotai Jun'an Securities Co., Ltd. and CITIC Securities Co., Ltd. All the participants, either senior managers of the member companies or officials of the IT departments, made sufficient communications on the SSE's technical requirements and two topic issues, including the "measures for technical system' safe operation in bullish market" and "technology strategy planning for future market".
SSE's requirements won high recognition among the participants. Most of them said the symposium was very timely. With safe operation as the top priority for the capital market, it is necessary to work out an immediately effective but also long-term plan on vigorous technology investment for the bullish market. As member units, they will be willing to share the experience of safe operation with their counterparts and implement SSE's technical requirements for the bullish market.
In the communications, most member units said that to avoid the "trading block", they had increased their investment in system construction, including the expansion of telephone lines and the upgraded system. However, they also pointed out some of their own problems, such as the shortage of professionals, lack of exchanges, separation between business and technology, the slow progress in information technology standardization and the poor-quality products from software suppliers. Most participants held that with these issues gradually settled, the member companies would deal with the bullish market more easily.
At the end of the symposium, Xie stressed that the information system is important for the securities companies' operation efficiency and competitiveness as well as their operation safety and even the entire market's safety. All members should be cautious about the information system and never trust the luck. Great attention should be paid to the information system' construction, investment and audit.
