The comprehensive deepening of the reform of the capital market is in a critical period to strengthen the legal protection of investors from the source

Securities Times reporter Cheng Dan

At present, it is a critical period to build a strong capital market, and it is the main task of the current capital market to comprehensively deepen the reform of the capital market, give full play to the market function to help new quality productivity, adhere to the investor-oriented, and vigorously improve investor services.

Cheng Hehong, chief lawyer of the China Securities Regulatory Commission and director of the Department of Rule of Law, said at the main forum of the China Securities Regulatory Commission at the annual meeting of the 2024 Financial Street Forum "Promoting the High-quality Development of the Capital Market by Comprehensively Deepening the Reform of the Capital Market" that to protect the legitimate rights and interests of investors, it is necessary to regulate the market activities of important entities such as securities issuers, listed companies, securities and futures operating institutions, and securities and futures fund managers in accordance with the law, give full play to their active role, and strengthen the legal protection of investors, especially small and medium-sized investors, at the source.

Give full play to the function of the capital market to help the development of new quality productivity

The capital market has an irreplaceable and important function in guiding all kinds of resource elements to gather in scientific and technological innovation, smoothing the virtuous cycle of science and technology, industry and capital, and is playing a greater role in cultivating and developing new quality productive forces.

"The most important feature of new quality productivity is innovation, including scientific and technological innovation, production mode innovation, management model innovation, etc." Speaking at the forum, HKEX Chief Executive Officer Tim Chan said that stock exchanges are a core component of capital markets, providing direct financing services for a wide range of innovations. In recent years, in order to promote innovation and the development of new quality productivity, HKEX has made a lot of efforts in the reform of the listing system and the enhancement of market liquidity, so as to provide a listing path for more potential innovative companies. In the future, HKEX will continue to expand and enhance Stock Connect, promote a number of market reforms, and continue to innovate products and services to serve the development of new quality productivity.

The Shanghai and Shenzhen North Stock Exchanges have also solved the problem of inclusive innovation by improving the institutional mechanism, and launched innovative measures from the aspects of issuance and underwriting, mergers and acquisitions, refinancing, equity incentives, trading mechanisms, and private venture capital, so as to further enhance the institutional inclusiveness of the capital market for new industries, new business formats, and new technologies, encourage innovation, and tolerate failure. By increasing inclusiveness, we will attract high-quality companies that represent new quality productivity, and provide listing and financing facilities for companies with good quality and potential.

Statistics show that as of October 15, since the beginning of this year, the IPO funds raised by the Science and Technology Innovation Board, the Growth Enterprise Market and the Beijing Stock Exchange have been 11.01 billion yuan, 15.18 billion yuan and 2.97 billion yuan respectively, accounting for more than 60% of the total amount of funds raised. From the perspective of industry sectors, enterprises in the electronics, power equipment and computer sectors raised the highest amount of funds. All these indicate that the capital market is guiding the resource elements to further concentrate in the field of new quality productivity.

Mao Hansong, Secretary of the Party Committee and President of the China Securities Financial Research Institute, said that the new quality of productivity represents the leap of productivity, and scientific and technological innovation and industrial transformation are important supports for the development of new quality productivity. Finance is an important force driving innovation and the industrialization of science and technology, and it is an important mission of the capital market to adhere to the fundamental purpose of serving the real economy, improve the investment and financing mechanism to promote scientific and technological innovation, and accelerate the cultivation and development of new quality productive forces.

It is worth noting that the systems of mergers and acquisitions and reorganization and equity incentives in the capital market are advancing with the times and have further adapted to the needs and characteristics of the development of new productive forces. Wind data shows that since the beginning of this year, all A-share listed companies have disclosed a total of 155 restructuring events, involving 137 restructuring projects, of which more than half are related to new productivity. M&A and restructuring have become an important way for industrial integration, transformation and upgrading, and an effective means for cultivating and developing new quality productivity.

Strengthen legal protection for small and medium-sized investors

The Third Plenary Session of the 20th Central Committee of the Communist Party of China (CPC) made strategic arrangements for further deepening the reform of the capital market in an all-round way. To promote the stability and long-term development of the capital market, it is necessary to adhere to the principle of strengthening the foundation and strict supervision and management, adhere to the reform to promote development and ensure stability, effectively protect the legitimate rights and interests of investors, establish a clear orientation for rewarding investors, and better play the function of the capital market to serve the real economy.

"To safeguard the legitimate rights and interests of investors, it is necessary to regulate the market activities of securities issuers, listed companies, securities and futures operating institutions, securities and futures fund managers and other important entities in accordance with the law, give full play to their positive role, and strengthen legal protection for investors, especially small and medium-sized investors, at the source." Cheng Hehong said that securities issuers should adhere to honesty and trustworthiness and fasten the first button to safeguard the rights and interests of investors in capital market activities. Listed companies should consolidate the market foundation for safeguarding the rights and interests of investors with tangible investment returns. Securities and futures operating institutions should prudently conduct business in accordance with the law and provide high-quality market services to safeguard the rights and interests of investors. Securities and futures investment fund managers should take the highest standard of care based on investors and strictly perform their fiduciary management duties to safeguard the rights and interests of investors. Market intermediaries such as sponsors, certified public accountants, and securities lawyers should be professional market "gatekeepers" to safeguard the rights and interests of investors. Investors also owe a duty of good faith and a duty of fair dealing to each other. Relevant securities and futures market institutions should also strictly perform their main responsibilities for handling investors' appeals.

Chen Liang, Chairman of CICC, said that adhering to the investor-oriented principle is conducive to promoting the long-term healthy development of the capital market and safeguarding the interests of investors, which is the long-term success of securities companies. Regarding the improvement of investor services, Chen Liang suggested that it is necessary to give full play to the professional advantages of securities companies, increase the creation of high-quality products, provide investors with more stable investment returns, and continuously improve investors' sense of investment.

Wang Sheng, chairman of China Galaxy Securities, said that the current demand for investment and financial management of residents is becoming more and more vigorous, and at the same time, the demand of investors has gradually developed from simple brokerage transactions and wealth management products to investment advisory accompaniment, asset allocation, and then to "one-stop" comprehensive financial service solutions throughout the life cycle. How to provide long-term adaptation of products and services for different customer groups by improving services, and realizing the adaptation of clients and products, capital and assets has become an important issue for the high-quality development of the securities industry.

Zhao Shanzhong, President of the Securities Association of China, said that the capital market is a complex ecosystem with multi-party participation, and the support and participation of investors are inseparable from the various functions of the capital market. To achieve the high-quality development of the capital market, it is necessary to continuously deepen the reform to improve the investor service capacity of the whole market, and we must pay more attention to the feelings of investors, enhance investors' sense of gain, and enhance investor confidence.

The pace of opening up the capital market to the outside world has accelerated

At present, China's capital market is speeding up the pace of opening up to the outside world, providing more opportunities for international capital. Charlie Walker, Deputy Chief Executive Officer of the London Stock Exchange, mentioned in a video speech that at present, United Kingdom and China have issued many policies to promote the healthy development of capital markets, emphasizing high-quality development and supporting innovative growth, which are both targeted and powerful.

"The current series of policies introduced by China will have a positive impact on economic development, such as stabilizing real estate prices and boosting market confidence." Chen Aiya, chief economist of Morgan Stanley Asia, pointed out that he believes that China can well cope with the challenges of population aging and trade frictions that the world is generally facing. At the same time, a healthy economic environment and a healthy capital market will contribute to the development of the entire economy, and a benign and effective capital market is also beneficial to investors.

Howard Davis, chairman of the China Securities Regulatory Commission's International Advisory Committee, chairman of Inigo Insurance Company and former chairman of the United Kingdom Financial Services Authority, said that compared to United States, the banking systems in Europe and China are larger and more debt-oriented than within the capital markets. With such a financial structure, growth companies, "scaling" companies in Europe and China still need to improve their efforts to seek capital to boost growth. Therefore, it is very important to give better play to the function of the capital market, increase the proportion of equity capital, and accelerate the development of the venture capital market to promote the healthy development of the economy.

Fiona Bassett, chief executive of FTSE Russell Group, said the index plays a vital role in supporting the development of the real economy. In recent years, China has actively implemented financial liberalization measures, including the removal of restrictions on foreign ownership in the banking, financial asset management and insurance industries. This shows that China's financial markets are increasingly interconnected with the global economy. FTSE Russell wants to work with regulators, exchanges and market participants to develop index products that reflect the unique characteristics of the Chinese market. Reach more investors by working together to build a more efficient, resilient, and inclusive financial system.