04/03/2003
China Daily

The mainland's securities-market regulator has announced further measures to reform the operation and governance of the country's capital markets.

The China Securities Regulatory Commission (CSRC) announced the new initiatives on April 1.

The CSRC will no longer oversee 27 areas including delistings, securities clearing and settlement, the launch of new securities companies, personnel changes in foreign securities institutions and fund management companies, and training.

In December, the regulator handed over supervisory functions related to 32 areas, allowing self-regulation by market participants.

The new measures reflect a continuing trend towards adopting more international and market-driven practices and reducing government interference, said Xu Hongyuan, deputy director of the development department of the State Information Center, an influential government thinktank in Beijing.

Reform measures were set in motion by former CSRC chairman Zhou Xiaochuan during his three-year tenure.

"CSRC's role is changing as more market participants are entering the arena and more rules are being established," Zhou told a seminar last December. He added that the watchdog should distance itself from the market and instead be a good referee to ensure fairness and transparency.

Zhou's successor, Shang Fulin, a former vice-governor at the central bank and former president of the Agricultural Bank of China, has maintained the momentum of reform, although at a different pace so as to ensure less disruption in the bourses, said Xu.

Shang, too, has earned praise for his pragmatic and moderate style in handling reforms.

CSRC said on April 1 that stock exchanges would be granted authority to suspend trading of a particular stock, and to delist companies under relevant regulations.

CSRC would also no longer review prospectuses of mainland companies listing overseas. This is expected to help expedite offshore listings.

Under the new measures, foreign securities institutions are no longer required to seek CSRC approval to upgrade local representative offices or to appoint foreign staff for domestic operations. They will only be required to inform the regulator of such moves.

In terms of market practitioners, the burden of self-regulation has been firmly placed in their hands. For example, training responsibilities have been handed over to the Securities Association of China, an industry body which is also in charge of professional certification.

Streamlining government functions would help prevent corruption because it would provide officials fewer opportunities to abuse their powers, said Wei Jianing, a senior researcher at the development and research department of the State Council.

He added that strengthening regulatory mechanisms and reducing administrative functions would help minimize misdeeds and reduce financial risks.