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More financial products planned despite crisis

CHINA plans to continue stepping up innovation in its capital market despite the global financial crisis and will strengthen supervision and clamp down on financial crimes, China's top securities regulator said today.

"People tend to be conservative about financial products after the crisis but we feel the market still needs innovation," said Shang Fulin, chairman of the China Securities Regulatory Commission, at the Lujiazui Forum 2009.

"Only by introducing innovation can we improve market efficiency. We will definitely launch more futures products as well as studying plans to unveil cross-border financial products."

China has been preparing to unveil the country's first stock-index futures products in Shanghai and has pledged to push forward other financial derivatives such as index options and single-stock options.

The central government is also allowing Shanghai to explore the introduction of exchange-traded funds to track indexes constituted by Hong Kong-listed stocks as part of the measures to develop the city into a global financial hub.

Shang said that the stock regulator will shore up supervision to deal with the impact of the global financial crisis with a focus on overseeing cross-border capital flows. It will set up emergency plans to counter major risks.

The CSRC will also rev up efforts to clamp down on market manipulation, insider trading and illegal profit transfers between market participants in order to maintain order, Shang said.

The top securities regulator said the country will ensure the steady launch of the country's Nasdaq-like Growth Enterprise Board by speeding up the pace of drafting rules and educating investors.

China is expected to launch the GEB in Shenzhen as early as August, which will help small start-up companies raise capital.

"We will help smaller companies solve the fund-raising problem and we will also help existing listed companies to conduct mergers and acquisitions to upgrade their industry structure, " Shang told the forum.

The CSRC will encourage publicly-traded companies to distribute more dividends to shareholders and continue to develop its bond market, according Shang. The regulator is also studying how to reform the system in pricing initial public offerings, Shang said, without elaborating.

China halted IPOs in its stock market last September amid worries that an increased supply of stock would further dent investors' confidence after the market dropped heavily last year.

The central government has yet to say when the country may resume new stock sales but many industry experts believe that IPOs will be launched again on the new GEB in the third quarter.


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