Shanghai Stock Exchange Governor: System Of Decentralizing Refinancing Examination Being Studied

On the afternoon of March 6, the deputies to the NPC and the members of the CPPCC National Committee coming from the system of the China Securities Regulatory Commission (CSRC) held the first press conference, at which Gui Minjie, Member of the CPPCC National Committee and Governor of the Shanghai Stock Exchange (SSE), answered the questions raised by journalists at home and abroad.

Gui: System of Decentralizing Refinancing Examination being Studied

The building of the blue-chip market will be driven in five aspects, in a bid to increase its appeal and investment value.

Efforts will be made to study the feasibility of two-way listing and trading on the SSE and the Hong Kong Exchanges & Clearing Ltd. (HKEx).

Yesterday, Gui said at the press conference held by the CSRC that the SSE had been studying the system and scheme of decentralizing refinancing examination, and it had taken the preparations for and implementation of the adjustment to the refinancing examination system as one of the major tasks of 2013.

The SSE adopted the innovative live broadcast through its official micro-blog at the press conference. It was an important move made by the SSE for transparency, according to Gui.

Preparations are being made for decentralizing refinancing examination.

For the question of what preparations have been made for decentralizing refinancing examination put forward by the Shanghai Securities News, Gui said that the SSE had been cooperating with the CSRC in studying the system and scheme about this issue, with rules, technologies, and personnel involved.

Besides, the SSE had taken the preparations for and implementation of the adjustment to the refinancing examination system as one of the major tasks of 2013. Namely, it will study, rationalize, and optimize the procedures for refinancing examination, as well as cut the examination time, simplify and publicize the examination standards, processes, and progresses, with an aim of building a market-oriented refinancing examination system.

Gui added that refinancing, one of the key financing way in the capital market, is of great significance for listed companies. Public additional issuance, public issuance, private placement, and other refinancing ways could meet different needs of companies. The examination on the refinancing of the listed companies which disclose information continuously should be differentiated from that on IPOs, as proper adjustment to the examination mechanism is necessary. Refinancing involves a lot of issues, so the adjustment to refinancing examination should face questions such as how to reduce substantive judgments, give full play to the role of SMEs in decision-making, and enhance the quality of information disclosure.

It is imperative to amend the “Securities Law”.

Gui said that the existing “Securities Law” was amended in 2005. However, some parts of the “Securities Law” have been incompatible with the market growth as the market has witnessed the rapid development in recent years.

For instance, a lot of emerging derivatives are not mentioned in the “Securities Law”, which targets at the public market, especially the public issuance market. Nevertheless, the private placement market should also be regulated by law. Moreover, the “Securities Law” had little regulation on the bond market on the whole, so it had not met the needs of bond market development.

Gui added that although regulatory authorities were reinforcing the punishment on violations in the market, the regulation work was impeded due to the low costs of violations and the improper regulation system. “A professional police force and a specialized law enforcement team should be fostered to crack down on crimes on the securities market. We should fight against crimes including finance-related criminal offences and civil tort. It is also worth discussing on whether we could build the relevant professional courts,” said Gui, who hoped that the amendment to the “Securities Law” would solve the problem.

The building of the blue-chip market will be driven in five aspects.

Gui stressed that the SSE would continue to propel the construction of the blue-chip market, in a bid to increase its appeal and investment value. Specifically, importance should be attached to the following five aspects. First, the market promotion and service should be strengthened, so that more companies would be willing to be listed on the SSE. Second, more products and tools should be released, especially those related to financing. More breakthroughs should be made by way of equity financing, debt financing, merge and acquisition, equity pledge, and others. Third, diversified indices should be compiled, and more ETF products should be developed on the basis of these indices. Fourth, enterprises, especially large blue-chip companies, should elevate their corporate governance. Fifth, in a proper time, large blue-chip companies should be urged to initiatively release individual stock options on the institutional-investor-oriented service platform for institutional investors’ hedging and arbitrage.

Efforts will be made to study the feasibility of two-way listing and trading on the SSE and the HKEx.

For the question of how the SSE and the HKEx further their cooperation, Gui said that the SSE had been drawing on merits from overseas markets including the HKEx. Last year, the SSE and the HKEx cooperated in an array of issues such as establishing a joint-venture company, releasing cross-border ETFs with the Hang Seng China Enterprise Index (HSCEI) as the underlying, and holding seminars on index compilation.

Gui revealed that both sides were studying the mutual custody of the two exchange’s data and the promotion of unifying the industry classification standard for China’s listed companies. Next, the feasibility of two-way listing and trading on the two exchanges will be studied as well.

The SSE will launch 12 major tasks in 2013.

Gui said that like the national economy, the SSE market was facing the challenge of speeding up reform and realizing transformational development. Next, the SSE will fuel the innovation, reform, and opening-up of the main board market, and contribute to the marketization, legal construction, globalization, and transparency.

The 12 major tasks to be carried out by the SSE are as follows.

(1) The direct channel for information disclosure will be carried out by stage. (2) The new delisting system will be strictly implemented. (3) Listed companies will be urged and guided to distribute dividends and give returns to investors, so that the market’s investment function and financing function will be further balanced. (4) The SSE will further participate in regional over-the-counter markets, as it is negotiating with some districts, cities, and provinces. (5) The SSE will complete the institutional-investor-oriented service platform, namely, an open pan-finance over-the-counter private placement market supporting the registration and issuance, trading and transfer, business marketing, and information communication of all the innovative financial products. (6) The SSE will boost the rapid growth of new products and businesses, expand the scales of new businesses including quotation repo, margin trading and securities lending, and collateralized repo of stocks, realize quotation repo on a regular basis and pilot securities lending of refinancing, launch collateralized repo of stocks, ETF repo, and others, as well as speed up the cross-boarder ETF product development. (7) The SSE will launch individual stock options, expand the pilot scope of the SSE members’ simulated trading in the auction trading system, perfect all the tasks including the business scheme, rule system, and risk control system of individual stock options, and it will initiatively release individual stock options on the institutional-investor-oriented service platform. (8) Efforts will be made to prepare for and implement the adjustment to the refinancing examination system. (9) The SSE will comb all business rules, simplify business procedures, and cut trading costs, in an effort to build a rule system conducive to improving the efficiency of the market operation. (10) The exchange system reform will be propelled in a steady way. In detail, the SSE will make in-depth research on fundamental and profound problems such as the property ownership, equity framework, and governance structure of the exchange, as well as specify the scheme of the exchange system reform and do the relevant publicity work in the market. (11) The “All-round Service” concept will be cemented. The exchange, as a financial service agency, will reinforce its original function. (12) The SSE will boost the internationalization by enhancing its service capacity, channel building, and market construction for investors worldwide.

For details, please refer to the SSE’s official micro-blog (“SSE Release”).