May 09, 2012 06:04 PM

The Battle over Securities Reform

China's securities regulator has been busy. Over three straight days from April 27, it announced cuts to fees for commodity futures trades, issued guidelines on the new rules for public listings and unveiled plans for tougher rules to delist companies from the main and secondary boards of the Shenzhen and Shanghai stock exchanges. A day later, on April 30, the two exchanges and the China Securities Depository and Clearing Corp. also announced that they would cut trading fees.

The flurry of regulatory changes recalls the stock market's transformation at the turn of the century. China Securities Regulatory Commission (CSRC) chairman Guo Shuqing has been winning praise for his reform push.

Having been appointed to the job only in October 2011, Guo is said to be eager to stamp his authority. That was not why he acted, he said. He told the People's Daily this year that he "strongly disagreed" that a new leader had to make drastic changes just to prove himself. Instead, he said, the commission was only doing its job, and none of the measures taken so far could wait.

Was he being modest or savvy? Whatever the interpretation, it's clear his job isn't easy, given the many problems in China's securities market. Reforms are urgently needed, yet they cannot be rushed. Guo needs a clear head.

Legions of retail investors and other market players will no doubt be banking on the reforms to work. But change takes time and effort, and their expectations should be realistic.

The series of initiatives and Guo's more open and less bureaucratic style of leadership signal that he is serious about reform. Furthermore, the commission's recent internal shake-up adds to the impression of a no-holds-barred reform push.

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