CSRC’s View of the Key Issues of Capital Market
COVID-19 and China
Money. Image credit: Unsplash/Micheile Henderson

► CSRC increases penalties for financial fraud and other infractions.
► The commission promotes the bidirectional opening of capital markets, improves market activity, cultivates value investment ideas and protects investors.

We have summarized ten key takeaways from the speech by Yi Huiman (易会满) at the "National Investor Protection Promotion Day on May 15."

Penalties for violations
Violations that began before March 1 but continue to occur and cause harm will be severely punished under the provisions of the new securities law, which has significantly strengthened the legal responsibility of financial fraud and other serious violations of rules and regulations.

Risk prevention
CSRC accelerates the construction of an inter-ministerial linkage and central-regional cooperation risk prevention and disposal mechanism for the risks of PE funds. In promoting the smooth operation of the capital market, it will firmly avoid administrative intervention and actively strengthen communication with the market and enhance policy coordination in all aspects.

Investor protection
Yi Huiman emphasized that investors are the foundation of capital market development, respecting and protecting investors is the fundamental regulatory mission of the securities regulatory department. With the implementation of the new securities law, the overall quality of listed companies showed some positive changes, and the cash dividends reached a record high of CNY 1.36 trillion.

Support of the real economy
CSRC continues to support economic recovery. In the first four months, IPOs, refinancing and exchange bond market financing grew faster, with M&A trading 1.2 times higher than in the same period last year.

Policy optimization
Comprehensively clean up and optimize the supporting rules and regulations, strengthen supervision during and after the event, and comprehensively implement the "warm and transparent approval.”

Increase in market activity
First, further develop the public fund management team. Second, continue to strengthen communication and coordination with relevant parties to promote the relaxation of ratio and scope of medium- and long-term funds into the market. Third, develop and improve the supporting policy arrangements for institutional investors in taxation, performance evaluation and accounting, and strengthen the idea of value and long-term investment.

CSRC will continue to implement the registration system, focus the refinancing audit on critical issuance conditions and timely release refinancing audit guidelines to enhance market expectations, promote the refinancing classification audit, and further optimize high-quality listed companies’ process of the private placement.

Stake reduction
Classified policy, step-by-step steady adjustment. On the one hand, continue to strictly regulate the controlling shareholders, actual controllers and the directors, supervisors and managers reduction. On the other hand, appropriately provide VC and private enterprises policy to solve difficulties.

CSRC has made great efforts to smoothen the diversified exit channels such as forced, reorganized and active withdrawal, and a total of 18 companies, the highest in the record have achieved smooth exits.

Market reformation and open up
Follow-up including refinancing policy adjustment, infrastructure sector public offering REITs pilot, red-chip enterprises in the domestic listing arrangement optimization and a series of reform and innovation initiatives have been introduced.

In conclusion, CSRC tends to be stricter to financial frauds and other violations and continues to support the real economy, thereby promoting economic recovery. 

Editor: Edward Turkson
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