Market law gets second review

Perfecting the system of delisting stocks and strengthening efforts to crack down on illegal activities in the capital markets will be highlights in the second review of the revision of the Securities Law, according to a member of the Standing Committee of the National People's Congress, China's top legislature.

Wu Xiaoling, deputy director of the Financial and Economic Affairs Committee of the NPC, told media in Beijing on Mar 9, that the review would highlight four points.

"First, we need to perfect the basic trading systems, including securities trading, settlement and delisting. Second, we need to create space for developing a multilevel capital market so as to facilitate enterprises' financing. Third, we should pay more attention to investor protection by strengthening efforts to crack down on illegal activities and increasing channels for investors to compensate for loss, legal advocacy and administrative remedy. Last but not least, market rules should be further tightened," said Wu.

"Information authenticity and complete information disclosure are central to the capital market, so we need to intensify inspections and severely crack down on illegal information disclosure and market manipulation."

Li Shuguang, a law professor at China University of Political Science and Law, says the second review pays attention to key areas, which makes it different from the first review of proposed amendments to the law.

"The latest review shows that China will adopt a 'tolerant entry and strict exit' regulation idea," says Li, noting that the pace of IPO approval is faster and the implementation of delisting is more determined.

"For zombie companies - consistently loss-making, staff-heavy State-owned enterprises that continue to operate without much rationale - and fraudulent companies, the delisting process will be quicker", Li says.

Li also says creating space for a multilevel capital market is a wise move because China has developed the New Third Board. It is developing stock connections for mainland bourses with those in Hong Kong and London, besides reforming the ChiNext board.

According to Li, the Supreme People's Court has confirmed civil compensation to victims of fraudulent statements made by players in the securities market.

caixiao@chinadaily.com.cn