Industry News | The State Council is heavy! The third

The State Council recently issued the "Several Opinions on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market". The opinions issued this time have a total of 9 parts, which is the third "national nine articles" in the capital market. According to reports, the opinions issued by the State Council thoroughly implement the spirit of General Secretary Xi Jinping's important instructions on the capital market, and implement the deployment of the Central Financial Work Conference, which is a guiding document for the capital market issued by the State Council again after the two "National Nine Articles" in 2004 and 2014.

Basic formation of capital market in the next 5 years

The overall framework for high-quality development

Deeply grasp the main connotation of high-quality development of the capital market, and achieve stable and healthy development of the capital market in serving major national strategies and promoting high-quality economic and social development. We must adhere to and strengthen the leadership of the Party, fully leverage the political, organizational, and institutional advantages of the Party, and ensure that the capital market always maintains the correct development direction; We must always practice the concept of finance for the people, highlight the value orientation of putting the people at the center, more effectively protect the legitimate rights and interests of investors, especially small and medium-sized investors, and help better meet the growing wealth management needs of the people; We must comprehensively strengthen supervision, effectively prevent and resolve risks, maintain a stable tone, and prioritize strict measures to ensure that supervision is both thorny and sharp; We must always adhere to the principles of marketization and rule of law, highlight goal orientation and problem orientation, further comprehensively deepen capital market reform, and coordinate openness and security; We must firmly grasp the theme of high-quality development, adhere to integrity and innovation, and more effectively serve key areas of the national economy and the construction of modern industrial systems.

In the next five years, a general framework for high-quality development of the capital market will be basically formed. The institutional mechanism for investor protection has been further improved. The quality and structure of listed companies have significantly improved, and the strength and service capabilities of securities, funds, and futures institutions continue to enhance. The regulatory capacity and effectiveness of the capital market have significantly improved. The formation of a sound ecosystem in the capital market is accelerating. By 2035, a highly adaptable, competitive, and inclusive capital market will be basically established, and the legitimate rights and interests of investors will be more effectively protected. The investment and financing structure has become more reasonable, the quality of listed companies has significantly improved, and significant progress has been made in the construction of first-class investment banks and investment institutions. The regulatory system and mechanism of the capital market are more complete. By the middle of this century, the modernization level of the capital market governance system and governance capacity will be further improved, and a high-quality capital market that matches the needs of a financial powerhouse will be established.

Strictly control the access to issuance and listing

Further improve the issuance and listing system. Improve the listing standards for the main board and ChiNext, and improve the evaluation criteria for the scientific and technological innovation attributes of the Science and Technology Innovation Board. Improve the quality and efficiency of issuance and listing guidance, and expand the coverage of on-site inspections for enterprises under review and related intermediary institutions. Clearly disclose dividend policies when going public. Include pre listing surprise "clearance style" dividends and other situations in the negative list of issuance and listing. Strictly regulate the spin off and listing. Strict review and control of refinancing.

Strengthen the full chain responsibility of issuance and listing. Further strengthen the main responsibility of the exchange for review, improve the establishment and operation mechanism of the stock listing committee, and strengthen the full process supervision of the performance of the committee members. Establish a review and traceability accountability mechanism. Further strengthen the primary responsibility of issuers and the "gatekeeper" responsibility of intermediary institutions, and establish a "blacklist" system for intermediary institutions. Adhere to the principle of "declaration is responsibility" and strictly investigate illegal and irregular issues such as fraudulent issuance.

Strengthen the supervision of issuance and underwriting. Strengthen the supervision of all aspects of new stock issuance, pricing, and allocation, and rectify market chaos such as high price over offering and group price suppression. Strictly strengthen the supervision of information disclosure for fundraising projects. Standardize and guide the healthy development of capital in accordance with the law, strengthen penetrating supervision and regulatory coordination, and severely crack down on behaviors such as illegal proxy holding, sudden investment at abnormal prices, and profit transmission.

Strict continuous supervision of listed companies

Strengthen information disclosure and corporate governance supervision. Build a comprehensive punishment and prevention system for anti-counterfeiting in the capital market, and seriously crack down on illegal and irregular behaviors in key areas such as financial fraud and fund occupation. Urge listed companies to improve their internal control systems. Give full play to the supervisory role of independent directors and strengthen the guarantee and constraint of their performance.

Comprehensively improve the system of rules for reducing holdings. Introduce management measures for reducing holdings of listed companies and implement classified policies for different types of shareholders. Strictly regulate the reduction of holdings by major shareholders, especially controlling shareholders and actual controllers, and resolutely prevent various detours of reduction based on the principle of substance over form. Order the violator to repurchase the illegally reduced shares and pay the price difference. Strictly crack down on all types of illegal reduction of holdings.

Strengthen the supervision of cash dividends for listed companies. Restrict major shareholders from reducing their holdings and implement risk warnings for companies that have not received dividends for many years or have a low dividend ratio. Increase incentives for high-quality dividend companies and take multiple measures to promote the increase of dividend yields. Enhance the stability, sustainability, and predictability of dividends, promote multiple annual dividends, pre dividends, and dividends before the Spring Festival.

Promote listed companies to enhance investment value. Develop market value management guidelines for listed companies. Research on incorporating market value management of listed companies into the internal and external assessment and evaluation system of the enterprise. Guide listed companies to repurchase shares and cancel them in accordance with the law. Encourage listed companies to focus on their main business and comprehensively utilize methods such as mergers and acquisitions, equity incentives, etc. to improve the quality of development. Strictly crack down on illegal and irregular activities such as market manipulation and insider trading under the pretext of market value management in accordance with the law.

Intensify delisting supervision efforts

Deepen the reform of the delisting system and accelerate the formation of a normalized delisting pattern where all withdrawals should be made and promptly cleared. Further strict mandatory delisting standards. Establish and improve a differentiated delisting standard system for different sectors. Scientifically set the scope of application for major illegal delisting. Tighten financial delisting indicators. Improve trading delisting indicators such as market value standards. Intensify the implementation of standardized delisting. Further facilitate diversified delisting channels. Improve policies and regulations on mergers and acquisitions, encourage and guide top companies to focus on their main businesses and increase their integration efforts with listed companies in the industry chain. Further reduce the value of "shell" resources. Strengthen the supervision of mergers and acquisitions, enhance the relevance of the main business, strictly control the quality of injected assets, increase the supervision of "shell listing", and accurately crack down on various illegal "shell listing" behaviors. Further strengthen delisting supervision. Strictly implement delisting and crack down on illegal activities such as financial fraud and market manipulation that maliciously evade delisting. Establish a sound compensation and relief mechanism for investors during the delisting process, and compensate investors for losses in accordance with the law for controlling shareholders, actual controllers, directors, executives, etc. who are responsible for major illegal delisting.

Strengthen the supervision of securities and fund institutions

Promote the industry to return to its roots, become better and stronger

Promote the high-quality development of securities and fund institutions. Guide industry institutions to establish correct business concepts and handle the relationship between functionality and profitability. Strengthen the management of industry institutional shareholders and business access, and improve the qualifications and filing management system for senior executives. Improve the regulatory system for key businesses such as derivatives and margin trading. Promote industry institutions to strengthen their investment banking and wealth management capabilities. Support top institutions to enhance their core competitiveness through mergers and acquisitions, organizational innovation, and encourage differentiated development and distinctive operations of small and medium-sized institutions.

Actively cultivate a good industry culture and investment culture. Improve the compensation management system in the securities fund industry that is suitable for business performance, business nature, contribution level, compliance risk control, and social culture. We will continue to carry out comprehensive governance of industry culture, establish and improve a system for classifying and listing employees, and establish a mechanism for managing professional reputation. We will resolutely rectify bad practices such as materialism, extravagance, seeking quick success, and flaunting wealth.

Strengthen transaction supervision

Enhancing the intrinsic stability of the capital market

Promote the smooth operation of the market. Strengthen comprehensive analysis and assessment of stock market risks. Strengthen the reserve of strategic forces and the construction of stable mechanisms. Concentrate on rectifying prominent risks and hidden dangers in the field of private equity funds. Improve the market-oriented, legal, and diversified bond default risk disposal mechanism, and resolutely crack down on debt evasion and abandonment. Explore futures regulatory systems and business models that are suitable for China's development stage. Carry out cross market and cross industry cross-border risk monitoring and response.

Strengthen transaction supervision. Improve regulatory standards for abnormal trading and market manipulation. Introduce procedural trading supervision regulations and strengthen the supervision of high-frequency quantitative trading. Develop operational rules for private securities funds. Strengthen bottom line thinking and improve response measures for extreme situations. Serious investigation and punishment of illegal and irregular activities such as manipulating the market and maliciously short selling, and strengthened deterrence and warning.

Establish a sound expectation management mechanism. Incorporate the assessment of the impact of major economic or non economic policies on the capital market into the macro policy orientation consistency assessment framework, and establish a coordination mechanism for the release of major policy information.

Vigorously promote the entry of medium and long-term funds into the market

Continuously strengthening long-term investment strength

Establish a market ecosystem for cultivating long-term investment, improve the basic system for adapting to long-term investment, and build a policy system to support long-term investment. Vigorously develop equity public funds and significantly increase the proportion of equity funds. Establish a fast approval channel for trading open end index funds (ETFs) to promote the development of index based investment. Comprehensively strengthen the investment and research capabilities of fund companies, enrich the types and investment portfolios of public funds that can be invested in, and shift from a scale oriented to an investor return oriented approach. Steadily reduce the comprehensive fee rate of the public fund industry, and study and standardize the compensation system for fund managers. Revise the classification and evaluation system for fund managers, and urge the establishment of rational investment, value investment, and long-term investment concepts. Support the stable development of private securities investment funds and private asset management businesses, and enhance the stability of investment behavior.

Optimize the policy environment for insurance fund equity investment, implement and improve performance evaluation methods for state-owned insurance companies, and better encourage long-term equity investment. Improve the regulatory system for insurance fund equity investment and optimize the information disclosure requirements of listed insurance companies. Improve investment policies for the national social security fund and basic pension insurance fund. Improve the investment flexibility of corporate pension and personal pension. Encourage bank wealth management and trust funds to actively participate in the capital market and increase the scale of equity investment.

Further comprehensively deepening reform and opening up

Better service and high-quality development

We will focus on five major areas: technology finance, green finance, inclusive finance, pension finance, and digital finance. Promote the deepening and implementation of the stock issuance registration system, enhance the competitiveness of the capital market system, enhance the inclusiveness of new industries, new formats, and new technologies, better serve the implementation of national strategies such as technological innovation, green development, and state-owned enterprise reform, as well as the development and growth of small and medium-sized enterprises and private enterprises, and promote the development of new quality productivity. Increase support for stock and bond financing for enterprises that comply with national industrial policy guidance and break through key core technologies. Intensify the reform of mergers and acquisitions, and take multiple measures to activate the M&A and restructuring market. Establish a sound sustainable information disclosure system for listed companies.

Improve the multi-level capital market system. Adhere to the staggered development of the main board, science and technology innovation board, ChiNext board, and Beijing Stock Exchange, deepen the reform of the New Third Board, and promote the standardized development of regional equity markets. Further promote the circulation of fundraising, investment management, and retirement, and give full play to the role of entrepreneurial investment and private equity investment in supporting technological innovation. Promote the high-quality development of the bond and real estate investment trust (REITs) market. Develop futures and derivatives markets steadily, prudently, and in an orderly manner.

Persist in coordinating the high-level institutional openness and security of the capital market. Expand and optimize the cross-border connectivity mechanism of the capital market. Expand financing channels for overseas listing of enterprises and improve the quality and efficiency of overseas listing filing management. Strengthen the construction of regulatory capacity under open conditions. Deepen international securities regulatory cooperation.

Promote the formation and promotion of capital markets

The synergy of high-quality development

Promote the strengthening of the rule of law in the capital market and significantly increase the cost of illegal activities. Promote the revision of the Securities Investment Fund Law. Introduce regulations on the supervision and management of listed companies, revise regulations on the supervision and management of securities companies, accelerate the formulation of regulations on the management of corporate bonds, and study and formulate regulations on the management of real estate investment trusts. Promote the introduction of judicial interpretations for the crime of violating trust and damaging the interests of listed companies, as well as judicial interpretations for civil compensation such as insider trading and market manipulation, as well as judicial documents to combat criminal acts such as misappropriation of private fund funds and breach of trust in the use of entrusted property.

Intensify joint efforts to crack down on illegal activities in securities and futures. Establish a sound mechanism for discovering clues, reporting rewards, and so on. Improve the judicial system and mechanism for securities law enforcement, and enhance the efficiency of administrative criminal coordination. Strengthen efficient collaboration between administrative supervision, administrative trials, and administrative prosecutions. Intensify administrative, civil, and criminal accountability efforts, and strictly investigate and punish various illegal and irregular behaviors in accordance with the law. Increase the application of the special representative litigation system for securities disputes and improve the system of party commitment in administrative law enforcement. Explore the pilot program of securities civil public interest litigation initiated by procuratorial organs. Further strengthen the construction of the integrity system in the capital market.

Deepen coordination and linkage between the central, local, and inter ministerial levels. Strengthen macroeconomic policy coordination, promote high-quality development of the real economy and industries, and create a favorable environment for the healthy development of the capital market. Implement and improve tax policies such as equity incentives for listed companies, medium - and long-term funds, private equity venture capital funds, real estate investment trusts, etc., and establish a sound financial and tax system conducive to the formation of innovative capital and active markets. Establish a centralized and cross departmental regulatory data information sharing mechanism. Strengthen the responsibility of local governments in improving the quality of listed companies and resolving risks related to bond defaults and private equity institutions.

Build a strong regulatory army with strong political skills, abilities, and work style. Put political construction in a more prominent position, deepen the comprehensive and strict governance of the Party, and forge a high-quality and professional team of capital market cadres who are loyal, clean, and responsible. Resolutely eliminate erroneous ideas such as "exceptionalism," "elitism," and "particularism.". Strictly and strictly improve the management of resigned personnel, rectify problems such as "shadow shareholders", improper shareholding, "revolving doors" in politics and business, and "escape style resignations". Eradicate the soil and conditions that lead to corruption, resolutely punish corruption and risk intertwined, capital and power linked, and create a clean and upright political ecology.

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