BIZCHINA / Finance
10th Five-Year Plan
Updated: 2006-04-18 10:13
3.Supervisory measures and system construction
The China Securities Regulatory Commission actively set its sights on the
remaining unsolved problems and formulated a whole set of risk prevention
and resolution systems.
The first step is to continue resolving the misappropriation of client
transaction capital balances. By the end of 2000 the client transaction
capital balance increased 127 percent to 303.7 billion yuan. However, the
misappropriated amount decreased to 8.7 billion yuan, down 200 percent
from 26.622 billion yuan from the year before. The misappropriation rate
was 2.33 percent, with a decrease rate of 13.67 percent.
The number of securities companies climbed to 69 from 45 over the
previous year, which has restored the client transaction capital balance
completely. In addition, more than 300 illegal securities sales agencies
have been removed. And some securities departments were successfully
separated from their securities headquarters.
On June 28, 2000, internal securities functional departments and
securities sales departments of China Huatuo Trust Company, China Great
Wall Trust Company, China East Trust Company, China Xinda Trust Company
and China Insurance and Trust Company, formed the China Yinhe Trust
Company. The second step was to solve the remaining problems. On March
14, 2000 the China Securities Regulatory Commission decided stock equity
transferences would begin from April and that it would take around 24
months to circulate on the market.
In 2000, about 2.985 billion yuan in stock equity transference belonging
to 128 companies circulated on the market without affecting market order.
This breakthrough will serve as a reference for other unresolved problems
in our securities market.
The third step is to establish a national, unified securities
registration and settlement system that will reduce the risk of
settlement and guarantee the normal functioning of systematic payments.
Based on the Stock Act, the Chinese Securities Regulatory Commission
actively prepared to construct the China Securities Registration and
Settlement Company, which began operations at the beginning of 2001.
The fourth step is to set up three major risk funds. According to the
Stock Act and the Resolution of Establishing a Securities Market Risk
Fund made at the Central Finance Conference, the Chinese Securities
Regulatory Commission can set up a risk fund with cooperation from some
relative departments. It will work to guarantee the stable operation of
the securities organization to help prevent and solve individual risks.
The year 2000 saw the remodeling of supervisory ideas for the securities
regulatory department. The first manifestation was to accelerate the
marketization process. Owning to the new regulatory ideas, the
marketization reform was carried through successfully in 2000. The
central task of marketization is to solve residual structural problems
and to increase the role of the securities market in investments,
financing and capital collocations through structural adjustments.
These new ideas can be summarized as follows: Leave the problems to the
market only if it can resolve them. The regulatory department should help
create conditions for the market to solve problems when necessary. Based
on these new ideas, the reform of securities marketization moved steadily
and achieved great success.
Firstly, the stock issuance system has been reformed. Quota control and
governmental recommendations were abolished and a new regulatory system,
which included recommendations by major dealers, auditing by the issuing
and auditing committee, and authorization by the China Securities
Regulatory Commission, was carried out. Secondly, the marketization of
issuing and price systems has been realized with new added measures of
online price bidding, combined with sales distributions among legal
persons and secondary market investors. This way, prices will be decided
by the market. Thirdly, measures are taken to enhance the responsibility
of self-disciplined organizations.
The second change of the securities regulatory department is to
strengthen the supervision of the securities market to protect investor
benefits. To achieve this the Chinese Securities Regulatory Commission
put its emphasis on three aspects: strengthening the supervision of
disclosing information in the listed companies; making efforts to
increase frontline supervision on the market by establishing inspection
substations in nine regulatory securities offices throughout the country;
improving the securities market supervisory system and putting strict
restrictions and administering punishments on illegal issues like
manipulating stock prices and malicious speculation.
In 2000 alone, the Chinese Securities Regulatory Commission filed 118
cases that were contrary to laws and regulations for investigation and
prosecution, and assigned administrative sanctions to 31 cases. The China
Securities Regulatory Commission also made progress in system
construction by boosting the structural adjustment of the listed
companies. To support the construction of the modern corporate system at
financial enterprises, the China Securities Regulatory Commission
prescribed the content and format for revealing information to listed
companies, which became the set rules for listing financial enterprises.
In 2000 the China Minsheng Banking Corp Ltd was given the green light to
list on the market, including Hongyan Trust Company following its
successful reshuffling. Other achievements in system construction include
promoting online securities trust transactions. (The Commission has
printed and distributed the Approval Procedure of the Online Trust
Transaction for Securities Companies.) In 2000, 23 securities companies
were approved to carry out online trust transactions, where business
volume accounted for 3 percent of the total.
The third effort involves standardizing the actions of listed companies.
The commission did a lot of work this year concerning the stockholder
meeting of the listed company, external voucher, large assets reshuffling
and disclosing profit forecasts and ST, PT company information. The
fourth endeavor is to enlarge the securities companies. In 2000 some
securities companies continued to boost their capital and stock shares
after the 1999 increase.
By the end of 2000, about 22 securities companies accomplished this goal.
Thirteen securities companies became the first comprehensive securities
companies in China and 11 others were approved as brokers for securities
companies. According to statistics, the total assets of the existing 101
securities companies topped 570 billion yuan -- up 87 percent from 308.1
billion yuan in 1999. The net capital amounted to 23.67 billion yuan --
9.6 times that of 1999.
In the meantime, the China Securities Regulatory Commission and the
People's Bank of China issued the Regulations on the Stock Impawning Loan
of the Securities Company that allowed securities companies to obtain
loans from the commercial bank by using stocks and securities investment
certificates as impawning. The fifth goal is to set up a supervisory
framework at the securities companies and the sixth involves making new
progress in experimenting with securities investment funds.
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