The Shanghai Stock Exchange (SSE) has recently released the “2014 SSE Self-regulation Work Report”, comprehensively summarizing its self-regulatory work in 2014 from 7 aspects such as improving regulatory transparency, optimizing information disclosure means, enhancing regulation on abnormal market fluctuation, and accelerating the transformation of regulatory method.
The report holds that as a major body of market self-regulation, the SSE plays an important role in ensuring fairness, standardization and stability of the market as it is on the frontline of market regulation with such advantages as being promptly and flexibly responsive to market changes. After decentralization of some administrative and approval rights to the exchange, the SSE should accelerate the regulatory transformation to comprehensively promote its self-regulatory work towards being market-oriented, law-based, open and international by adhering to the concept of “transparent regulation based on laws”.
According to the report, 2014 is the starting year of deepening China’s all-round reform. Being positive towards reform and innovation, the SSE has made full use of leading, promoting and guaranteeing functions of rule of law in its reform and innovation, by releasing such innovative businesses as Shanghai-Hong Kong Stock Connect. With accelerated promotion of the strategies of stocks, bonds, derivatives and internationalization, the SSE’s self-regulation has presented 7 major features of being law-based, transparent, active, technological, balanced, coordinated and service-oriented. Now, its market self-regulation has stepped into a new stage.
First, the SSE has been adhering to the principle of law-based self-regulation in its system building. It emphasizes “priority of rules” and attaches importance to giving full play to the fundamental role of the work of comprehensively developing rules in its self-regulation. Besides, it keeps improving the transparency of self-regulation, enhancing “sunshine” self-regulation. Second, with regard to the regulation of listed companies, it has optimized information disclosure means, studied and promoted an “active” mode for regulation of listed companies, kept optimizing the direct channel for information disclosure, and enhanced in-process and aftermath regulation; it has enhanced the rapid response mechanism and improved its ability of dealing with hot issues; it has promoted industry regulation and classified regulation, strictly implemented the delisting system, and actively resolved market risks. Third, with regard to the regulation on abnormal market fluctuations, it has adopted more “technological” self-regulatory means by adopting such hi-tech means as big data to realize on the whole the transformation from the traditional regulatory mode with experience-based judgment to the new regulatory mode combining technologies with experience-based judgment; it has expanded the source of clues, improved its ability in detecting clues of violations, and further coordinated with inspection and law-enforcement departments; it has strengthened the monitoring and investigation on abnormal trading to maintain trading orders. In 2014, a total of 271 abnormal transactions were investigated and handled, and over 100 cases of insider trading and market manipulation were reported, which provided ample clues for inspection and law enforcement. Fourth, it has developed and perfected the risk control mechanism for abnormal market fluctuation, further improved relevant contingency measures, and established the rapid response system for information on abnormal market fluctuation. Fifth, it has accelerated the transformation of regulatory method through building the “coordinated” self-regulatory system. Sixth, it continues to educate investors and focus on the “service-oriented” investor protection. Seventh, it has discussed 38 disciplinary penalty cases and adopted such disciplinary penalties as public condemnation, criticism notice, and public identification that certain people are not suitable to take the position of director, supervisor or senior executive.
In addition, the report has also made an outlook on the SSE’s self-regulation in 2015. In its next step, the SSE will further transform its regulatory philosophy, mechanism and method on the basis of regulatory transformation, urge market entities to fulfill their functions, reduce market costs, increase market efficiency, and bring off its role in safeguarding the open, fair and just market order, and protecting legitimate rights and interests of investors, especially small and medium-sized investors, thus promoting the sound development of the capital market, and better assume its responsibility in building an open, fair and just market. First, a regulatory concept with information disclosure as the core will be established to continuously shift the self-regulation to in-process and aftermath regulation; second, it will improve the self-regulatory rule system and boost the registration system reform of stock issuance. Third, it will improve the investor protection mechanism and enhance its investor protection service. Fourth, it will bring innovation to the market regulation and fully cooperate with entrusted law enforcement.