Source: Brokerage China
According to reports from Qiushi.net, Wu Qing, the chairman of the China Securities Regulatory Commission, published a signed article titled "Striving to Create a New Situation for High-Quality Development of Capital Markets" in the February 1 issue of Qiushi magazine.
Regarding the key tasks for the next phase of Capital Markets reform, Wu Qing stated that it is essential to maintain stability while pursuing progress, promote stability through progress, prioritize risk prevention, strengthen regulation, and foster development as the main line of action. The motivation is to further comprehensively deepen Capital Markets reform, strengthen foundations and basics, enforce strict monitoring and management, continuously promote the effective implementation of the new "Nine Regulations" for Capital Markets and the "1+N" policy system, and constantly create a new situation for high-quality development of Capital Markets.
Specifically includes:
1. Adhere to stability as the priority, and make every effort to form and consolidate the favorable trend of market stabilization and improvement. Strengthen the monitoring and analysis of Capital Trend and investor behavior, enhancing the foresight, initiative, and effectiveness of the work. Enrich the policy tools for stabilizing the market and prepare incremental policy reserves. Rectify illegal stock recommendations and other chaotic phenomena, and resolutely crack down on violations that mislead investors and harm their property safety.
2. Accelerate reform and opening up, deepening the comprehensive reform of investment and financing in capital markets. Urgently implement the overall plan for further comprehensive deepening of capital market reforms, mature one item, and launch another.
3. Focus on primary responsibilities and major tasks, striving to enhance the effectiveness of regulatory enforcement and the level of investor protection. Strengthen the recovery and correction functions of daily supervision, effectively using law enforcement to tackle major malicious violations. Quickly, accurately, and harshly crack down on illegal activities, concentrating efforts to investigate financial fraud, "hollowing out" listed companies, and severe market manipulation.
4. Strengthen functional utilization to strongly support economic recovery and improvement. Support the development of new productive forces, ensure the implementation of policies such as "Seventeen Articles on Venture Capital" and "Eight Articles on the Star," support quality unprofitable technology enterprises to go public, develop diversified equity financing, and promote smooth exit channels for private equity and venture capital.
5. Focus on consolidating the foundation and cultivating more listed companies that embody the requirements of high-quality development. Strengthen efforts to prevent and combat fraud, implement the comprehensive punishment and prevention work regarding financial fraud in the capital markets, fully implement the guidelines for listed companies' market value management, enhance constraints on listed companies' dividend distributions and buybacks, advocate for cancellation-type buybacks, and guide stable profit and cash flow enterprises to increase dividend frequency and improve dividend levels, with the aim of enhancing investor returns.
6. Emphasize introspection and deepen the comprehensive strict governance of the party system within the China Securities Regulatory Commission. Maintain a clear understanding of the corruption situation in the capital markets and uphold the integrated promotion of the "three no corruptions"; fully support and cooperate with the discipline inspection and supervision team stationed at the China Securities Regulatory Commission from the Central Commission for Discipline Inspection and the National Supervision Commission to deepen the special governance of corruption issues in the securities issuance review field, and strengthen penetrating governance efforts against new types of and hidden corruption, striving to build a regulatory team with a solid political foundation, strong capabilities, and excellent work style.
Promoting high-quality development of capital markets is of great significance in the new situation.
Wu Qing pointed out that promoting the high-quality development of capital markets is an essential responsibility in serving the high-quality development of the economy, an urgent task in accelerating the construction of a financial powerhouse, and a necessary choice for effectively resolving the contradictions and problems inherent in capital markets.
Wu Qing stated that developing new quality productive forces has become a key focus for driving high-quality development. Innovation requires a more flexible and inclusive financing environment, and the unique risk-return mechanism of capital markets can effectively promote the formation of innovative capital, stimulate entrepreneurial spirit and innovation vitality, which is crucial for assisting in the transformation and upgrading of industries, and promoting high-level circulation of technology, industry, and finance. Accelerating the development of capital markets also helps to enrich financial products and services, optimize financing structures, and enhance economic resilience and risk resistance capabilities, all of which contribute to promoting high-quality development. From the evolution of financial structures in various countries, especially in major developed countries, the importance of developing direct financing is continually increasing, and capital markets are increasingly becoming an important embodiment of a country's core competitiveness, making the construction of a strong capital market a significant support in building a financial powerhouse.
After more than 30 years of reform and development, China's stock market and bond market have ranked second globally in scale, and the trading volume of commodity futures ranks prominently in the world. The market has now reached a stage where it is transitioning from rapid growth to high-quality development, and issues of development quality have become the main contradiction currently constraining the healthy and stable development of China's capital market. Wu Qing pointed out that, from the financing end, the total number of listed companies in China is considerable, but the structure is not reasonable; the technological content of leading listed companies is still low, and the support for technological innovation and industrial transformation has not been fully realized. From the investment side, the instability of funds and the short-term nature of investment behaviors remain prominent issues, and the total amount of medium- and long-term funds is still significantly insufficient, as the leading role has not been fully realized. Addressing the aforementioned contradictions and problems ultimately requires enhancing the quality of development in capital markets.
Key points for high-quality development of capital markets focus on five aspects.
In April 2024, the State Council issued several opinions on strengthening regulation to prevent risks and promote the high-quality development of capital markets, and the China Securities Regulatory Commission, along with relevant parties, formulated and revised several supporting documents and institutional rules, forming a "1+N" policy system that systematically reshapes the foundational systems and regulatory underlying logic of capital markets.
Wu Qing stated that efforts should be made to maintain the stable running of the Capital Markets, adhere to strict legal supervision, continuously promote the enhancement of the quality and investment value of listed companies, and focus on improving the effectiveness of Capital Markets services for high-quality development.
Wu Qing pointed out that in recent years, China's Capital Markets have shown many new situations and characteristics. Promoting the high-quality development of Capital Markets requires further deepening the understanding of the main features and operational rules of China’s Capital Markets, continuously enhancing the foresight, initiative, and effectiveness of work, and firmly following the path of financial development with Chinese characteristics. Currently, five aspects must be grasped.
Specifically, it is essential to grasp the relationship between stability and progress, the relationship between the total amount and structure, the relationship between the whole and parts, the relationship between supervision and vitality, and the relationship between opening up and security.
The six tasks for the high-quality development of Capital Markets are clearly defined.
Wu Qing proposed to adhere to the principle of seeking progress while maintaining stability, promoting stability through progress, focusing on risk prevention, strengthening regulation, and promoting development as the main line, further deepening the reform of Capital Markets as the driving force, strengthening the foundation, ensuring strict supervision and management, continuously pushing for the implementation of the new "National Nine Policies" and "1+N" policy system in Capital Markets, and constantly creating new scenarios for the high-quality development of Capital Markets.
Firstly, prioritize stability and strive to form and consolidate the momentum of market recovery. Firmly implement the important requirements of the Central Economic Work Conference regarding stabilizing the stock market, strengthen monitoring and regulation of both domestic and overseas markets, as well as the interlinkages between spot and futures, enhance monitoring and analysis of Capital Trend and investor behavior, and improve the foresight, initiative, and effectiveness of work. Work with the People's Bank of China and relevant parties to better utilize the two structural monetary policy tools, enrich market stabilization policy tools, and properly prepare incremental policy reserves. Effectively manage risks in the bond market, implement financial support policies for local government debt reduction, and resolutely prevent the accumulation and resonance of risks. Strengthen proactive communication with the market, improve systems and mechanisms such as spokesperson roles, and timely respond to market concerns. Establish a responsibility system for public opinion guidance and hold listed companies and industry institutions accountable for reputation management. Rectify chaotic practices such as illegal stock recommendations and resolutely crack down on violations that mislead investors and harm their property security.
Secondly, accelerate reform and opening up, and deepen the comprehensive reform of investment and financing in Capital Markets. Promptly implement a comprehensive deepening reform plan for Capital Markets, rolling out mature initiatives as they are developed. On the investment side, collaborate with relevant parties to fully implement the "Implementation Plan for Promoting Long-term Capital Entry into the Market," encouraging all types of long-term funds to establish long-cycle assessment mechanisms, increasing the scale and proportion of investments in A-shares, and expediting the establishment of a policy framework that supports 'long money long investment.' Deepen the reform of public mutual funds, promote the establishment of assessment and incentive mechanisms linked to investor interests, continue to develop equity mutual funds vigorously, and support the high-quality development of index-based investments. On the financing side, research and formulate specialized policy arrangements to better support the development of new quality productive forces, deepen the reforms of the Star, GEM, and BSE, and enhance the inclusiveness and adaptability of the system. At the same time, adhere to promoting reform through opening up, optimize the overseas listing filing system, steadily expand cross-border connectivity in the Capital Markets, and improve the Qualified Foreign Investor system. Continue to promote the implementation of the 'Five Measures to Benefit Hong Kong' in Capital Markets, vigorously support Hong Kong's efforts to consolidate and enhance its status as an international financial center, and actively and steadily expand cooperation with overseas markets.
Thirdly, focus on primary responsibilities, and strive to enhance the effectiveness of regulatory enforcement and the level of investor protection. Adhere to a combined approach of punishment, prevention, and treatment, further improve the regulatory enforcement system and mechanism, leverage the advantages of the 'three-in-one' regulatory system consisting of the securities regulatory commission’s departments, dispatched institutions, and exchanges, strengthen the repair and correction functions of daily supervision, and effectively utilize law enforcement to tackle major severe violations. Act quickly, accurately, and forcefully to crack down on illegal activities, concentrating efforts on addressing financial fraud, 'hollowing out' of listed companies, and severe market manipulation. Utilize and optimize existing legal penalties, pursue main offenders, and punish accomplices, and increase accountability for those involved in such cases. Deepen the rule of law in Capital Markets, accelerate legislative and revision processes in key areas, introduce policies to protect small and medium-sized investors, and refine systems and mechanisms for representative litigation and commitments from parties. Strengthen technologically empowered regulation, effectively use Big Data and other technological means, break down 'data silos,' and further enhance the precision and effectiveness of oversight.
Fourth, strengthen functional performance to effectively support the economic recovery. Develop and issue implementation opinions on how the Capital Markets can achieve the five major financial initiatives, and improve the service system of stock, bond, and futures products that covers the entire lifecycle needs of various enterprises. Support the development of new productive forces, effectively implement policies such as the "Seventeen Articles for Venture Capital" and "Eight Articles for the Star Board," support high-quality unprofitable technology enterprises in issuing IPOs, develop diversified equity financing, and promote smooth and diverse exit channels for private equity and venture capital. Improve the multi-layered bond market system, increase the financing ratio of industrial bonds, vigorously develop technology innovation bonds and green bonds, accelerate the construction of the real estate investment trust (REITs) market, and steadily broaden the range of underlying assets. Focus on becoming a strong agricultural and manufacturing nation, and green transformation, enhance the layout of futures varieties, and improve the participation of industrial clients. Strive to enhance the professional service capabilities of industry institutions, strengthen the comprehensive ability to serve new productive forces and resident wealth management, and promote the construction of first-class investment banks and investment institutions.
Fifth, focus on solidifying the foundation and cultivating more listed companies that reflect the requirements of high-quality development. Increase efforts to prevent and combat fraud, implement comprehensive punishment and prevention measures against financial fraud in the capital markets, further improve the ability to discover clues regarding financial fraud, enhance corporate governance, and strengthen the role of internal controls in listed companies and the gatekeeping role of intermediary institutions. Fully implement guidelines for market value management of listed companies, increase constraints on dividends and buyback incentives for listed companies, advocate for canceling buybacks, and guide profitable companies with stable cash flow to increase the frequency and level of dividends, focusing on improving investor returns. Further play the primary channel role of the capital market in mergers and acquisitions, and improve the supporting mechanisms for the "Six Mergers and Acquisitions". Expand the coverage of visits to listed companies and promote improvements in operational management performance. Improve the orderly market ecology of entry and exit, consolidate and deepen the regular delisting mechanism, ensure smooth diverse exit channels, strengthen post-delisting supervision, and accelerate the improvement of institutional mechanisms that effectively protect the legal rights and interests of investors during the delisting process.
Sixth, emphasize inward scrutiny and deeply promote strict governance within the Securities Regulatory Commission system. Further strengthen the Party's comprehensive leadership over the capital markets, enhance the effectiveness of central inspection rectification, effectively fulfill the political and people-oriented aspects of supervision, and further enhance regulatory professional capabilities. Maintain a clear awareness of the anti-corruption struggle in the capital markets, adhere to a unified push for "the three no corruption strategies," fully support and cooperate with the disciplinary inspection teams of the Central Commission for Discipline Inspection and the State Supervision Commission stationed at the Chinese Securities Regulatory Commission to deepen the special governance of corruption in the securities issuance review field, increase penetrating governance efforts against new types of corruption and hidden corruption, consolidate and deepen the special governance results of the revolving door issues between the government and business, and continuously work to uproot the soil and conditions that breed corruption. Effectively promote the normalization and long-term effectiveness of party discipline learning and education, combine strict management and supervision with the motivation of accountability better, inspire the spirit of entrepreneurship, and strive to create a regulatory iron army with "strong political integrity, strong capabilities, and strong work style," providing strong support for the high-quality development of capital markets.
Editor/rice
