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In order to strengthen market discipline and reinforce accountability and responsibility of market participants, the Shenzhen Stock Exchange (SZSE) has recently expanded the number of companies and types of announcements eligible for Through-put Information Disclosure. The service is now accessible for companies rated as Grade A, Grade B and Grade C in disclosure quality assessment. Eligible issuers now account for 98.76% of all SZSE-listed companies. Corporate action announcements except those with operational risk are also covered in the service. According to a senior officer with the SZSE, expansion of the Through-put service will help accelerate regulatory transformation and advance regulatory philosophies. The regulatory focus will also be shifted from ex ante examination to ex post supervision.
The SZSE launched the pilot Through-put Information Disclosure service in October 2011. Qualified listed companies can directly disclose particular types of announcements to designated media via the SZSE technology platform. Therefore, listed companies are able to disclose information without the SZSE’s prior examination. The Through-put Information Disclosure not only increases disclosure efficiency, but also saves regulatory resources by shifting regulatory focus from ex ante examination to ex post supervision.
The Through-put Information Disclosure represents a significant change in the means of information disclosure by listed companies. SZSE introduced the service in a planned and progressive way based the principles of “smooth launch”, “step-by-step advancement” and “controllable risks”. Since the pilot launch, SZSE has adjusted the scopes of companies and types of announcements twice in July 2012 and February 2013 respectively.
Based on the smooth operation for more than two years, the SZSE has accumulated valuable experiences and solicited comments and suggestions from listed companies through various channels including training programmes and opinion solicitations. Meanwhile, the SZSE laid great emphasis on all the functionality components related to the operation of the service. It took into account factors including risks in information disclosure, frequency of different types of announcements and users’ operating habits. Constant efforts have been made to create a concise, scientific and systematic framework based on announcement types and to highlight the importance of risk control. A lot of preparatory work has been done to push forward the implementation of the service.
Along with the issuance of IPO reform opinions, a series of policies will come out afterwards step by step, which will further optimize market-oriented mechanisms and also impose higher requirements on transformation of regulatory approaches. Xiao Gang, Chairman of the China Securities Regulatory Commission, pointed out that market rules must be observed in regulation of the capital market and the regulatory focus should be shifted from ex ante examination to ex post supervision. According to an officer with the SZSE, after the current adjustment, there might be situations where listed companies make supplements or rectifications to their disclosed information, and there may be vulnerabilities to market manipulation and infringements through unscrupulous abuse of the tool. In response, the SZSE will give play to market disciplines, pay attention to investors’ needs of information and mainly address irregularities questioned by media, complained about by investors and discovered during supervision. In so doing SZSE will guide those with disclosure obligations to take the initiatives to enhance corporate governance, standardize information disclosure, fulfill social responsibilities and improve quality of listed companies.
The adjustment has been effective as of 13 January, 2014.
