Caixin
Feb 27, 2017 02:36 AM
POLITICS & LAW

Securities Watchdog to Step Up Reform and Market Cleanup

Liu Shiyu, chairman of the China Securities Regulatory Commission. Photo: Caixin
Liu Shiyu, chairman of the China Securities Regulatory Commission. Photo: Caixin

(Beijing) – China’s top securities regulator pledged to reform the country’s financial market and allow more companies to go public, while continuing to crack down on unscrupulous investors.

China’s capital market needs to carefully coordinate efforts to achieve reform, market stability and development, and more high-quality companies should be allowed to list on the market, said Liu Shiyu, chairman of the China Securities Regulatory Commission, at a press conference Sunday. Liu used a pearl necklace as a metaphor.

“High-quality listed firms are pearls for a necklace, and consistent and steady reform is the string to hold them together,” Liu said. “And the necklace needs to be locked by supervision.”

Taking the helm as top securities watchdog a year ago, Liu has led the CSRC to initiate a series of reform moves, including speeding up the review of initial public offering and cracking down on speculative activities linked to shell companies and privatization of overseas-listed Chinese firms.

Liu, 56,  was the head of state-run Agricultural Bank of China before he moved to the CSRC last February. Previously, he worked at the central bank for 18 years starting 1996, rising through the ranks before a promotion to deputy governor in June 2006. 

In 2016, the commission gave a green light to 280 IPO applications, and 248 companies completed the offerings, raising 163 billion yuan ($23.7 billion), according to Liu.

Liu reaffirmed the agency’s tough stance against unscrupulous investors, criticizing them for using regulatory loopholes to take advantage of small stock investors.

“The CSRC will not sit idly by,” Liu said at the news conference.

Since last December, Liu has lashed out several times at companies and wealthy investors that used unauthorized funds to finance leveraged buyouts, calling them “barbarians,” “demons” and “financial crocodiles.” Liu has vowed to toughen efforts to crack down investors preying on the financial market.

In a Feb. 10 speech, Liu vowed to catch “capital crocodiles” to prevent them from “sucking the blood of retail investors.”

With the development of cloud-based computing and big data technology, financial transactions leave digital trails allowing regulators to trace irregular trading activities, Liu said Sunday.

“For all these records, no matter old or new, we will cling to every clue we find,” the CSRC chief said.

Also at the news conference, CSRC Vice Chairman Fang Xinghai said China is considering allowing greater foreign ownership in the country’s securities and futures industry to help promote financial market reforms. Currently, foreign investors can hold up to 49% of securities, fund management and futures ventures in China. Hong Kong and Macau investors are allowed to take 51% stakes in ventures under economic partnership agreements.

Fang said the CSRC is still studying the long-awaited, so-called international board, which would allow foreign companies to list in the mainland market, without giving a timetable.

Contact reporter Han Wei (weihan@caixin.com)

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