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The Shanghai Stock Exchange (SSE) has recently mapped out the general work plan in 2007. In line with the requirements of the Central Economic Work Conference, the National Financial Work Conference and the National Conference on Securities and Futures Supervision, the SSE will seize favorable opportunities to tap its full potential by conforming to the requirements of economic development and global competition. Moreover, it will insist on safe operation and innovative development to promote a sound and rapid development of the SSE market as well as the continuous and stable development of the national economy.
An SSE official said that the SSE focused on four tasks and made outstanding achievements in 2006. Firstly, it effectively carried out the work for safe operation of the market. Secondly, it firmly promoted the equity division reform. Thirdly, it strengthened the construction of its blue chip market. Fourthly, it impelled the innovation of the products, services, trading modes and technologies.
According to an SSE official, 2007 will be a crucial year. The SSE faces both unprecedented opportunities and complicated challenges. The equity division that troubles the market development has almost been resolved. Besides, the comprehensive governance of securities companies is basically completed, with the successful listing of large enterprises. Moreover, long-term investment on the market has been consolidated, with investors' structure continuously optimized. All this has resulted in the new situation of two-way expansion and coordinated development of large enterprises and capital. In spite of the opportunities, there are challenges. As an "emerging and transitional" market, the SSE is facing fierce competition in listing resources from domestic and foreign counterparts. In terms of multi-level market construction, the current market structure is unbalanced, with few products, underdeveloped fixed income market and imbalanced structure of listed companies. In terms of technical facilities, with the growing market demand, the adaptability and safety of the whole market technology system will be confronted with more rigorous challenges. In terms of market organization, the marketization needs to be expanded. In terms of service capacity, the service concept, method, mode and effect are far away from the market demand.
Thus, the SSE will seize favorable opportunities to exert efforts on the following nine tasks.
In the first place, the management for market's safe operation is to be strengthened. Under the risk control of the New Generation Trading System, efforts will be made to ensure that the technology systems, exchanges and market participants are in order. To meet various requirements of launch of the system, relevant work in technology, operation, organization and coordination will be carried out. All this is to guarantee the successful introduction, stable launch and safe operation of the New Generation Trading System. Meanwhile, with a full awareness of the difficulty and complexity to wind up the equity division reform entirely, though almost completed, the SSE, through investigation over each company that fails to finish the reform for various reasons, will strengthen its coordination and window guidance to help them enter reform procedures as soon as possible.
Secondly, we should vigorously develop the blue chip market for further optimization and development of listed companies. The SSE will create more opportunities to impel H-share and red-chip companies to return to the mainland market for listing as well as attract backbone enterprises of the national economy to list on its market. Besides, to make the current listed companied stronger and bigger, the SSE will continue to create more favorable systems and market environment for listed companies' merger, acquisition and reorganization to accelerate the pace of overall listing of domestic companies. Moreover, to support the development of blue chip market, it will attract more standard capital on the market to promote the growth of institutional investors.
The third task is to propel the construction of mechanism and products of fixed income market on the basis of the fixed income electronic platform so as to rationalize the exchange's treasury bonds market. Specifically, the SSE aims to complete the first phase development and construction of the fixed income electronic platform this year. With main products of the treasury bonds, debentures (corporate bonds) and assets securitization products after the official launch of the system, the SSE, to actively expand the market of fixed income products, will promote the Trinitarine market innovation of products, trading mechanism and services. Besides, the SSE will actively impel and assist in the market infrastructure construction of debentures' issuance and appraisal systems. Furthermore, it will complete the organization and system construction such as the market maker system of the benchmark treasury bonds market.
Fourthly, we should promote the innovation of products and trading mechanism for expansion of market depth. To increase the market depth, the SSE will continue to impel market development at different levels and promote diversified trading mechanism of different market sectors. Besides, it will introduce and improve the margin trading and securities lending as soon as possible. With boost in the development of innovative products with blue chips as the underlying, such as the covered warrants and other structured products, the market liquidity of blue chips will be effectively improved through hedge, arbitrage and creation among the products. Moreover, the SSE will perfect the primary dealer mechanism and extend the block trading time. Taking advantage of the function release of the New Generation Trading System, it will introduce a series of new trading mechanisms. Furthermore, it will continue to prepare for the innovative products including the real estate investment trusts (REITs) as well as launch the research and development of options and ETF with commodities as the underlying.
Fifthly, facing the new challenges of supervision work after the all-floating, the SSE will further strengthen the market supervision and create a fair and transparent market environment. On the one hand, the SSE will enhance the supervision over major shareholders by preventing them from utilizing listed companies' information for insider dealing, strive to resolve such problems as listed companies' illegal guarantee and their major shareholders' capital occupation as well as supervise the information disclosure after the implementation of the new accounting standards. On the other hand, supervision according to law will be enhanced to further perfect the members' trading qualification management system and strengthen the on-the-spot inspection. In addition, the SSE will take the advantage of the launch of the 3rd Generation Market Supervision System to improve the market supervision efficiency. While strengthening joint supervision among the sectors of the industry, it will promote to build a new mechanism of inter-exchange, cross-border and cross-species supervision.
The sixth task is to fully implement the strategic plans for technology development, build a new technology system with the New Generation Trading System as the core as well as the future operational support for the New Generation Trading System. Through overall improvement of the technical management level, the SSE will ensure the smooth construction and successful launch of all its technical systems.
Seventhly, the SSE will improve comprehensive service capacity of technology, data, market promotion, investors' orientation, risk management and Internet trading management. All this is to provide high-quality services for all the market participants and create a better market environment for the development of China's securities market.
Eighthly, we should further govern the exchange according to law and deepen the international cooperation and communication. Therefore, the SSE will amend its constitutions and the "Securities Exchange Management Measures", perfect the "Trading Rules", the "Stock Listing Rules", the "Bond Listing Rules" and the "Implementation Rules on Acquisition of Listed Companies". Meanwhile, through in-depth cooperation with overseas securities market, the SSE will expand its overseas cooperation room by taking advantage of its listing resources, supervision and technology.
The last task is to rationalize the exchange's organization and coordination in various tasks and thus fully enhance the SSE's internal management and coordination level with more orderly, strict and efficient regulation. The SSE official finally pointed out that 2007 will witness profound changes in the entire financial industry and on the securities market. As the core of Shanghai's international financial center, the SSE's development is closely tied to the development of China's financial industry. To meet the new requirements of the financial industry's development, the SSE will vigorously and insistently support the financial industry's reform and
