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The Shanghai Stock Exchange (SSE) has recently issued its 1st quarter report on self-regulation management of 2009, summarizing and briefing relevant self-regulation work in the 1st quarter. The SSE starts to disclose the supervision white paper quarterly since this year to further enhance the supervision transparency and publicize the supervision information and policies in time.
According to the report, the SSE has conducted self-regulation management in five areas in the 1st quarter regarding the information disclosure of listed companies, bonds and funds and also the supervision over member companies and market trading.
Firstly, relevant self-regulation rules and systems have been improved to lay a more solid foundation for self-regulation supervision. By conducting special appraisal on business rules, the SSE strengthened the implementation of plans to formulate and amend the business rules. Meanwhile, it streamlined the operation of the Disciplinary Committee to improve disciplinary working mechanism.
Secondly, supervision over listed companies has been carried out by perfecting rules and guidelines and also imposing more severe punishment. The SSE issued the "Notice of Issues Concerning Implementation of 'Measures on Administration of Listed Companies' Acquisition' and Other Rules", the memorandum on annual work and other supplementary rules and guidelines to increase the supervision flexibility and transparency. In addition, more severe punishment has been imposed on such violations as illegal information disclosure and illegal stocks purchase and sale by listed companies' senior management. In the 1st quarter, the SSE has publicly criticized 4 listed companies and relevant personnel, criticized 6 companies and relevant personnel in circulars and expressed surveillance attention to relevant behaviors and events of 24 listed companies.
Thirdly, it stepped up supervision over bonds information disclosure. The SSE's "Notice of Doing a Good Job in Information Disclosure by Corporate Bonds Issuers in 2009" requires all issuers to strictly implement relevant stipulations in the "SSE Corporate Bonds Listing Rules" and fulfill the information disclosure responsibilities and obligations.
Fourthly, members' management has been upgraded through client management and technical management. Warrants risk prevention and supervision are strengthened to urge members to improve the client management of warrants business. The SSE has also promoted the implementation of the "Detailed Rules on Technical Management of Member's Trading and Related Systems" by members to upgrade their technical management. Besides, members' management has been upgraded by cooperation and exchange outside the bourse.
Fifthly, supervision over illegal trading has been reinforced with focus on supervision over warrants and big/small non-tradable stocks. In the 1st quarter, the SSE has discovered and investigated 147 abnormal trading events, with 81 warning phone calls to business departments of securities companies, 2 letters of supervision enquiry and 29 letters of supervision for members, 5 interviews with member companies, 5 visits to members' business departments and 4 cases of trading limits to securities accounts. By investigations and analyses, the SSE has discovered several evidences of suspected violations including market manipulation and insider trading, and requested the China Securities Regulatory Commission to put them on file or conduct further investigations. In curbing warrants speculation, shareholding lessening beyond required proportion by major shareholders and other abnormal trading, the SSE adopted such supervision and punishment measures as trading suspension and trading limits to securities accounts in a flexible way to effectively raise supervision deterrent and effectiveness.
According to an SSE official, the SSE started to publish the annual white book since 2005 to systematically summarize and analyze the self-regulation management throughout the year, which gained much attention and positive comments from the market. For better supervision transparency and due disclosure of supervision information and policies, the SSE had released the quarterly white book since the 3rd quarter of 2008, and the quarterly disclosure will be implemented in each quarter of 2009.
The annual and quarterly white papers, an important channel for the market to learn the supervision information, have also served as a platform and bridge of exchanges between the regulator and market participants.
