The Shanghai Stock Exchange (SSE) announced yesterday that 3 registration items would be cancelled, including securities companies’ subordinated bonds transfer, asset management plan’s share transfer, and participant business unit (PBU) lease. There will be no approval procedures and size limitations for applications that fall into the above-mentioned 3 items, with an aim to streamline beforehand approval items. This matches the SSE’s long-promoted idea of regulatory transformation, administration streamlining and shifting the regulation to the backstage.
According to an SSE official, the State Council and the China Securities Regulatory Commission (CSRC) have recently released the “Decisions on Cancellation and Adjustment of Administrative Approval Items” (the Decisions) and the “Notice of Further Streamlining Securities and Futures Registration Items” (the Notice). In response to the Decisions and the Notice, the SSE has further streamlined its approval and registration items on the basis of the actual regulatory conditions and the approval and registration item list issued this July. In accordance with the general requirement of marketization and institutionalization, approval items with clear legal evidence in the “Securities Law” or other laws and regulations will be maintained, while registration and approval procedures of items that should be determined by market entities will be cancelled.
The 3 registration items cancelled this time are securities companies’ subordinated bonds transfer, asset management plan’s share transfer, and PBU lease. The registration cancellation for securities companies’ subordinated bonds transfer is based on the CSRC’s requirements for regulatory consistence, while that for asset management transfer, a breakthrough in the SSE’s transformation to loose control and enhance regulation, is to meet the market demand, which further expands the channel of asset management transfer. For PBU lease, market entities with specific identities will develop their business arrangements via independent agreements. The previous practices adopted the principle of “approve according to application” and there were no substantial checks. The majority of the applications were approved once they could meet the conditions. Therefore, the cancellation of this item shows that the SSE’s determination in regulatory transformation and that it is not afraid of separation of powers and decentralization.
It is learned that the highlight in these cancellations is the marketization of cleaning standards. The SSE has classified items in need of beforehand approval into 2 categories: membership and securities listing, both with legal evidences supported by laws and regulations. Registration items are mainly those based on department regulations and business rules. The cleaning of these items is a cautious decision based on considerate scientific demonstration. The cleaning standards could be generally divided into 3 categories. First, items in need of approval in accordance with the “Securities Law” will be retained. Second, items that are essentially decided by market entities will be cancelled. Instead of beforehand approval, the SSE will adopt after-event regulation to these items. Third, for items with obvious self-regulatory characteristics, market entities, though meeting necessary conditions, may not be suitable to enter the market or operate. In this regard, the SSE will set up approval procedures as well as threshold or size that match market development to maintain trading order, prevent market risks and protect the interests of small-and-medium-sized investors. Thus, these items still need to go through approval procedures.
To sum up, the SSE has cancelled registration of 3 items on the basis of their necessity and reasonability, which is a new measure to further promote self-regulatory transformation and minimize its management on micro-issues. It is also a key measure adopted by the SSE to carry out the State Council’s requirement of streamlining beforehand approval and further improve the quality, efficiency and transparency of self-regulation and services.
In the meantime, to continuously promote standard, open and market-oriented self-regulation, the SSE decides to seize this opportunity of items cancellation to carry out evaluation on approval and registration items in its self-regulation and keep adjusting the item list to make the streamlining and decentralization work a normal operation, so as to improve its market regulatory and service quality.