“We will steadily advance the reform of the registration system, improve the mechanism for delisting on a regular basis, strengthen the bond market, give better play to the role of the multi-tiered capital market, and expand financing channels for market entities.” The words on capital markets in the 2021 government work report pointed out the direction for this year’s key reforms.
China Business News noted that this is the first time in the past eight years that the delisting mechanism has been included in the government work report.
The Fifth Plenary Session of the 19th CPC Central Committee proposed to fully implement the registration system of stock issuance, establish a normal delisting mechanism, and increase the proportion of direct financing. Yi Huiman, chairman of China Securities Regulatory Commission, once said that this is the strategic goal and key task of achieving high-quality development of the capital market during the 14th Five-Year Plan period.
At present, the reform of registration system is gradually moving towards the whole market from pilot. After the pilot of the science and technology innovation board and the growth enterprise board, the conditions for the whole market to carry out the registration system are gradually ready. On February 26, the spokesperson of the CSRC said that “further evaluation will be made on the basis of the pilot program, and after the evaluation, the registration system will be steadily promoted in the whole market”.
Looking back at the government work reports of the past eight years, it is clear how the reform of the capital market has gone through all the ups and downs.
Registration system for the first time to write report, from 2014 to 2015 triumphantly to comprehensively promote the reform, and then to the stock market abnormal fluctuation, back in 2016, 2017 and 2018, prudence and emphasize the rule of law, and in 2019, began in 2020, kechuang pilot registration system board, the gem successively fall to the ground, finally, in 2021, a comprehensive registration system be vividly portrayed, the government work report also focuses on steadily push forward reform and normalized delisted.
Step eight years
Since its inception 30 years ago, the modern Chinese securities market has been moving forward on the road of marketization, rule of law and internationalization reform. As the basic system of the capital market, the stock issue system, from the examination and approval system to the approval system and then to the registration system, has been gradually driving the market ecology to change.
The Third Plenary Session of the 18th CPC Central Committee clearly proposed to promote the reform of stock issuance registration system. On November 30, 2013, China Securities Regulatory Commission officially issued the Opinions on Further Promoting the Reform of the New Stock Issuing System.
In 2014, the registration system was written into the government work report for the first time — “Accelerating the development of a multi-tiered capital market, promoting the reform of the registration system for stock issuance, and standardizing the development of the bond market”. Stock issuance, gradually from the approval system to the registration system transition.
Accompanied by the launch of the reform, the market is full of expectations, and once shouted “reform cattle” coming. At the same time, A ferocious rally swept A-shares from the start of the second half of 2014, and investors were enthusiastic.
Starting from July 2014, the rising market started rapidly. Until June 12, 2015, the SSE Composite Index rose 152%, the Shenzhen Component Index rose 146%, and the Growth Enterprise Index rose 178%.
Under this background, the capital market reform also entered the fast lane. In the 2015 Government Work Report, the prefix of the registration system was changed from “to promote” to “to implement”, and the number of expressions on the capital market recorded in that year was also the highest in history, which has not been surpassed.
“We will strengthen the building of a multi-tiered capital market system, implement the reform of the registration system for stock issuance, develop regional equity markets serving small and medium-sized enterprises, carry out trials of equity-based crowdfunding financing, promote the securitization of credit assets, expand the scale of corporate bond issuance, and develop the financial derivatives market.” The report shows a strong appetite for reform not just in registration but in areas ranging from regional and over-the-counter markets to securitisation, bonds and derivatives.
However, the unusual volatility of the stock market in the summer of 2015 disrupted the pace of reform. In just 17 trading days, the Shanghai Composite Index fell 32%.
A new securities law, which was supposed to come out in time to provide legitimacy for registration reform, has stalled after its first reading.
At this time, the regulatory attitude turned cautious, pay more attention to market supervision and legal construction, and create conditions for the reform of the registration system.
Although new securities law did not come on time, but in December 2015, the 18th session of the twelfth session of the standing committee of the National People’s Congress passed the authorization of the State Council in implementing stock issuance of registration system reform adjust the decision of the relevant provisions of the applicable securities laws, as in securities law before an overhaul is finished, promote the reform of stock issuing system has provided a legal basis.
Three years xu li
The 2016 government work report did not mention the registration system.
“We will promote the reform of the stock and bond markets and the rule of law, promote the healthy development of the multi-tiered capital market, and increase the proportion of direct financing. The Shenzhen-Hong Kong Stock Connect will be launched in due course.” It can be seen that the focus of the capital market in this year is on the “rule of law” and “health”.
From the CSRC’s perspective, the focus of work in 2016 is also to reflect on lessons and improve the system.
“The stock market abnormal fluctuation fully reflects the Chinese stock market is not mature and immature traders, incomplete system, perfect market system, to adapt to the supervision system, etc., also fully exposed the CSRC regulation, regulation does not adapt with a hole is not capable, regulatory and other issues,” the CSRC’s then chairman xiao said in a regulatory work conference earlier this year, must be profound lessons, extrapolate, learn something, deepen reform, improve the system, strengthen supervision, to guard against risks, promote the steady and healthy development of capital market.
Specific work includes standardizing leverage financing, strict program trading management, strengthening futures market trading management, strengthening cross-market linkage trading management, and promoting the standardized development of asset management business. At the same time, strengthen the management of investor suitability and account opening review supervision, establish and improve the information disclosure system of listed companies, strengthen the front-line supervision, improve the effectiveness of supervision and so on.
The 2017 government work report also did not mention the registration system.
“We will deepen the reform of the multi-tiered capital market, improve the basic system of the main board, actively develop the Growth Enterprise Board and the New Third Board, and standardize the development of regional equity markets.” It can be seen that the report emphasized the improvement of the stock market, especially the improvement of the main board basic system. The CSRC’s focus was also on “stability” and “progress”.
The registration system was still not mentioned in the 2018 government work report. “We will deepen reform of the multi-tiered capital market and promote the development of the bond and futures markets.” As you can see, the annual report does not overdo the task of capital markets. From the work of the CSRC in those years, it is also more about the promotion of existing reforms and the improvement of rules.
However, the three-year retention of energy, in fact, to create the conditions for reform. The Shanghai-London Stock Connect was launched in October 2018. On November 5, 2018, General Secretary Xi Jinping announced at the opening ceremony of the first China International Import Expo that the science and technology innovation board was to be set up and the registration system was to be piloting, marking that the reform of the registration system had entered the stage of implementation.
article links：The registration system has been fully implemented
Reprint indicated source：Shine Trader Limited Live information