China’s Securities Regulator Commits to Further Opening and Reform, Eyes FTSE Russell

A recent meeting of the China Securities Regulatory Commission (CSRC) has outlined five key focal areas for its future work efforts, highlighting greater opening of the country’s capital market to foreign investors.

CSRC pointed specifically to active support for the inclusion of Chinese A-shares in FTSE Russell indices, as well as an increase the weighting of A-shares on MSCI Indices, according to a report from the state-owned Securities Daily.

The five areas stressed by CSRC include:

i) Continued reform of issuance systems, an active push for the merger and re-structuring of listed companies.

CSRC wants to improve mechanisms for the assessment of issuance and the monitoring and inspection of mergers and structuring.

ii) Bolster reform foundational systems.

This includes improvements to share buyback systems, expediting optimisations in the capital structure of listed companies, and raising investment value.

iii) Further expansion of openness to the outside.

CSRC said that it would accelerate the removal of cap son foreign investment in the securities sector, and strive to complete the London-Shanghai connect initiative by the end of 2018.

The securities regulator will also “actively support the inclusion of A-shares in FTSE Russell indices, and raise the percentage of A-shares in MSCI indices.”

Amendments to QFII and RQFII regulations are on the cards, alongside unification and loosening of entry standards and expansion of the foreign investment scope.

iv) Comprehensive increase in the services capabilities of investment banks.

CSRC said that it would research and explore the establishment of investment banks that are highly competitive internationally, with reference to further opening of China’s securities market.

v) Strengthening of strict and comprehensive legal regulation.

CSRC will continue to expand the vigorous of regulatory enforcement as well as make increased use of regtech, with an emphasis upon protecting the lawful rights and interests of small and medium-sized investors.

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