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February 20, 2017

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Securities watchdog crackdown to help investors

CHINA’S securities watchdog has said it will give more priority to supervision in the capital market to guard against risks and protect investors.

Liu Shiyu, chairman of the China Securities Regulatory Commission, said the CSRC would strictly supervise the market to maintain stability.

The CSRC is working with the Ministry of Public Security, the Supreme People’s Court and the Supreme People’s Procuratorate in cracking down on market fraudsters, and drafting judicial interpretations of supervision policies.

The CSRC issued 218 penalty notices in 2016, up 21 percent year on year, and confiscated 4.28 billion yuan (US$626 million), nearly triple the amount the previous year.

The securities watchdog has also strengthened its cooperation with overseas counterparts, dealing with 178 international cases in 2016.

“To prevent market risks, the regulator will keep a close eye on financial conditions both at home and abroad and be prepared,” CSRC assistant chairman Xuan Changneng said in January.

Xuan said that progress was made in capital market regulation last year thanks to action against wrongdoing and a vibrant market.

“The stock market in 2016 was much steadier compared with a year earlier. “Only seven trading days registered changes beyond 2 percent from March to December last year, and the benchmark Shanghai Composite Index gained 15 percent in the period,” he said. “The two stock exchanges both saw fluctuations of less than 10 percent in the second, third and fourth quarters.”

IPOs and refinancing by cash raised 1.33 trillion yuan last year, up 59 percent. IPOs hit a five-year high, according to Xuan.

“The bond market also flourished, with non-financing enterprises issuing 2.9 trillion yuan of bonds last year, up 170 percent,” he said.

“While financial risks were generally controllable, challenges remain,” said Lai Xiaomin, president of China Huarong Asset Management, a major state-owned asset management company.

Lai highlighted the buildup of non-performing loans, a slower economy, shortage of liquidity and squeezed profit space as major risks.

He called for better corporate governance structure to hold directors and supervisors responsible, while stepping up regulation and granting greater authority to regulators.

In July, the CSRC delisted a company for fraud during its IPO, the first time authorities have taken such action.

The CSRC said the company would be barred from relisting.


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