Fear investors  Build a high-quality capital market

Better help the economy and society to accelerate the recovery and development

Yi Huiman

(May 15, 2020)

Dear guests and friends:

　　Good afternoon everyone! First of all, I warmly congratulate the successful holding of the second National Investor Protection Publicity Day! Investors are the foundation of the development of the capital market. Respect, fear, and protection of investors are a concrete manifestation of the capital market’s implementation of the people-centered development concept, and it is also the fundamental regulatory mission of the securities regulatory authority. Over the past year, we have carried out a lot of fruitful work and achieved positive results in strengthening the organization and leadership of investor protection, advancing the innovation of litigation rights protection mechanism, consolidating the legal foundation, and promoting the integration of investor education into the national education system. Here, on behalf of the China Securities Regulatory Commission, I would like to express my sincere gratitude to the legislative and judicial organs, relevant ministries and commissions, market entities, news media and investors who have long cared about supporting the reform and development of the capital market and investor protection! I would like to take this opportunity to communicate with you on some of the current key and hot issues.

　　1. Promote the use of capital market hub functions to better support epidemic prevention and control and economic and social development

Since the outbreak of the new crown pneumonia epidemic, the China Securities Regulatory Commission has resolutely implemented the spirit of General Secretary Jinping’s important instructions and the decisions and deployments of the Party Central Committee and the State Council. Under the unified command and coordination of the Financial Commission of the State Council, it has consciously put the reform and development of the capital market on resolutely winning the prevention and control of the epidemic. In the overall situation of the defensive war, we should make overall plans and manage the capital market's own affairs in a down-to-earth manner. In terms of promoting the smooth operation of the capital market, we insisted on respecting the laws and trusting the market, resolutely refraining from administrative intervention, proactively strengthening communication with the market, strengthening policy coordination in all aspects, and realizing the normal opening and normal operation of the A-share market after the Spring Festival, and market resilience Significantly enhanced. The effectiveness of risk prevention and disposal in key areas such as stock pledges, bond defaults, and private equity funds has been remarkable, and the overall convergence has been reduced. In supporting the prevention and control of the epidemic and the resumption of work and production, implement the policy of “stabilizing expectations, expanding total volume, classifying, re-rolling, and creating tools”, and make special policy arrangements during special periods to reflect regulatory flexibility and regulatory temperature. Large areas have been severely affected by the epidemic and corporate financing support, the postponement of annual report disclosures, stock pledges, and "flexible" handling of margin financing and securities lending business. In the first four months of this year, IPO, refinancing, and exchange bond market financing maintained rapid growth; the amount of M&A and restructuring transactions was 1.2 times that of the same period last year. In terms of maintaining reform stability and stimulating market vitality, we have steadily promoted the implementation of the "12 deep reforms" key reform measures. The Science and Technology Innovation Board maintained a good momentum of development, and the number of listed companies exceeded 100. The reform of the Growth Enterprise Market and the pilot registration system started smoothly. The NEEQ reform launched a public offering and listed on the selected layer to accept and review. A series of reform and innovation measures such as the adjustment of refinancing policy, the pilot of public REITs in the field of infrastructure, and the optimization of domestic listing arrangements for red-chip companies have been introduced one after another.

At present, the global epidemic is still spreading, the impact on the world economy is still intensifying, international trade and investment are severely blocked, the global industrial chain and supply chain is facing a new round of adjustment, and the deep-seated impact on international relations and global governance is also Gradually, this is an external challenge that the capital market will have to face for a period of time in the future. Judging from the situation in my country, in the new stage of normalizing epidemic prevention and control, the pressure of external defense import and internal defense rebound is still relatively high. The data for the first quarter, including the quarterly reports disclosed by listed companies, show that the epidemic has impacted the real economy. The next step is to expand domestic demand, improve people's livelihood, expand employment, support the development of small, medium and micro enterprises, and stabilize and optimize the supply chain of the industrial chain. For the capital market, on the one hand, we must actively respond to severe and complex internal and external risks and challenges, and strive to achieve stable and healthy development of the market; on the other hand, we must take the initiative to implement the central "six stability" and "six guarantees". ; Requirements, strengthen counter-cyclical adjustments, promote market functions, and actively contribute to the decisive victory in building a well-off society in an all-round way.

　　 One is to continue to increase efforts to support economic recovery and development. The real economy is the foundation. This is something we must always keep in mind when doing financial work. As a "barometer" of the national economy, the capital market must not only be a good "thermometer", but also a "booster", and actively play a pivotal role in the allocation of factor resources, policy transmission hub, and risk prevention and mitigation hub. It will promote the integration of technology and capital, drive a virtuous cycle of finance and the real economy, and inject new momentum for real enterprises to overcome the impact of the epidemic and achieve quality and efficiency improvements. At the same time, we must continue to support the prevention and control of the epidemic and the recovery and development of the real economy to steadily mitigate and defuse various risks, so as to achieve the organic unity of stability and development.

　　 The second is to continue to increase efforts to promote the implementation of the new securities law. This revision of the Securities Law involves the comprehensive implementation of the securities issuance registration system, significantly increasing the cost of violations of laws and regulations, and increasing investor protection. It is a milestone for improving capital market governance capabilities and optimizing capital market development ecology. Every participant in the capital market should consciously strive to be the propagandist, practitioner, and guardian of the new securities law, jointly defend the dignity of the legal system and the authority of the rules, and work together to create a standardized, transparent, open, and dynamic , Resilient capital market.

　　The third is to continue to increase efforts to comprehensively deepen the reform of the capital market. The more severe and complex the situation is, the more we must unswervingly deepen reforms. The direction and determination of the capital market to promote reforms and expand opening up will not change because of the epidemic. We will always adhere to the principle of marketization and rule of law, learn from international best practices, adhere to the "four awes, one force" regulatory philosophy, increase key reforms, and reasonably grasp the pace and timing of reforms based on the epidemic prevention and control situation. We must promptly introduce reform measures that are conducive to better support for the prevention and control of the epidemic and the recovery and development of the real economy to ensure that the "12 deep reforms" are carried out in an orderly manner and gradually blossomed.

　　Fourth is to continue to increase efforts in optimizing the combination of decentralization and improving services. This is the proper meaning of market-oriented legal reforms, and it is also a fundamental strategy for stimulating market vitality and effectively serving the real economy. As long as it is an area where market constraints are more effective, it is necessary to resolutely delegate power to the market. We will take the opportunity of implementing the new securities law to comprehensively clean up and optimize supporting regulations and systems, strengthen supervision during and after the event; fully implement "sunshine approval and transparent approval", increase various "pocket policies" and clear hidden thresholds Strength; put supervision in the service, worry about the urgent needs of enterprises, think about what investors think, and make capital market supervision more popular and heartwarming.

　　 2. Maintaining "zero tolerance" for financial fraud and other vicious violations of laws and regulations, purifying the market ecology, and further gaining the trust of the market

　　At the annual meeting of the Association of Listed Companies in May last year, we issued initiatives and made clear requirements on severely cracking down on financial fraud by listed companies, rigorous market discipline, and improving the quality of listed companies. Over the past year, through the joint efforts of all parties, the positive factors that promote the improvement of the quality of listed companies have continued to increase, and a favorable environment is gradually taking shape. With the implementation of the new securities law, the pressure of strict supervision and strict inspection of listed companies continues to be transmitted, as well as the effect of external supervision by the media and market stakeholders. The controlling shareholders, actual controllers, directors and supervisors of listed companies The concept of "awe" has begun to take root in the hearts of the people. The overall quality of listed companies has undergone some positive changes, with cash dividends of 1.36 trillion yuan, a record high. But at the same time, we are also soberly aware that vicious violations of laws and regulations such as financial fraud, insider trading, and market manipulation have frequently occurred, which not only damages the market ecology, but more importantly affects investor confidence. In this regard, we must make heavy blows and use heavy criticisms, resolutely eliminate the black sheep, and earnestly protect the legitimate rights and interests of investors.

　　We maintain a high-pressure situation of daily supervision and inspection and law enforcement, and concentrate our efforts on investigating a number of major financial fraud cases that are highly concerned by the market and have severe impacts such as Kangdexin and Kangmei Pharmaceutical. These cases have some common characteristics: First, the fraudulent cycle is long and the amount is huge, often lasting for several years, and the inflated profits can easily be billions or even tens of billions. The second is the phenomenon of systematic and large-scale fraud. Some companies fabricate their businesses and engage in "two books"; some companies even regularly formulate fraud indicators and implement full-process fraud in collaboration with suppliers and customers both inside and outside. Third, fraud is also often accompanied by illegal and criminal acts such as illegal occupation, illegal guarantees, insider trading, and manipulation of stock prices. We will hold on to such cases and investigate them to the end. Recently, all directors, supervisors, and senior executives of a listed company have agreed to the annual report disclosure while claiming that "the report content cannot be guaranteed to be true, accurate, and complete", which has aroused widespread concern and criticism from the society. Corresponding regulatory measures have been taken. We believe that it is the statutory obligation of the directors, supervisors, supervisors and senior executives of listed companies to do a good job in the preparation, review and disclosure of periodic reports. To exercise the right to object to annual reports, they must abide by the basic principles of honesty, trustworthiness, diligence and due diligence, and never allow loopholes or abuse of power. Evasion of legal responsibility.

　　 Operating in compliance with laws and regulations is the bottom line of behavior that any company must abide by in a market economy. As a public company, listed companies must take the lead and set an example. At present, the epidemic has affected the operating performance of some listed companies. I believe that the market and investors can understand normal performance fluctuations. However, we must not tell lies, make up stories, make false accounts, and we must not use the name of the epidemic.“ "Big bathing" or "specializing themes", this is not only the basic restriction of the market, but also the bottom line of supervision. This revision of the Securities Law has greatly strengthened the legal liability for serious violations of laws and regulations such as financial fraud. The Securities Regulatory Commission will make good use of the regulatory powers granted by the new Securities Law, increase penalties, and strengthen regulatory deterrence.

　　 One is to highlight the focus of law enforcement, concentrate superior resources on investigating major cases such as financial fraud, promote multiple investigations of one case, deal with relevant listed companies, intermediaries, and individuals strictly, and report to the market in a timely manner. The second is to implement classified policies to reflect scientific supervision. Distinguish between actual violations and formal flaws, between affected by the epidemic and fraudulent use of opportunities, and between the responsibilities of listed companies and controlling shareholders and actual controllers, which not only reflects the seriousness of supervision, but also reflects the accuracy of supervision. The third is to use the case as a guide, through the "small cuts" of case disposal, to further improve the basic systems of information disclosure, corporate governance, etc., to strengthen the controlling shareholders, actual controllers, directors, supervisors, etc. ” Awareness, compact compliance responsibility. Further improve the relief and compensation mechanism, accelerate the revision of the "Criminal Law", and increase the protection of small and medium investors through representative litigation and execution links. Give full play to the joint efforts of market supervision, media supervision, and investor supervision to improve the incentive and restraint mechanism. The fourth is to strengthen scientific and technological supervision and make full use of modern information technology such as big data and artificial intelligence to continuously improve the effectiveness of supervision and law enforcement.

　　 It should be emphasized again that the new securities law has been formally implemented on March 1. All parties involved in the capital market must consciously follow the new securities law, know the law, abide by it, use it, and enforce it. For cases in which illegal activities did occur before the implementation of the new securities law and are still in the investigation and trial stage, we will adhere to the administration according to law and execute in accordance with the laws and regulations when the illegal acts occurred, but we will implement the spirit of the new securities law and be strict At the same time, we will promptly advance the clearing of accumulated cases. We will severely punish those illegal activities that started before March 1 but are still occurring and causing serious harm in strict accordance with the new Securities Law. By promoting the establishment of an authoritative and efficient capital market law enforcement system that integrates self-discipline management, daily supervision, inspection penalties, criminal accountability, class actions, and civil compensation, we will strictly enforce market discipline, maintain market order, and restore the capital market.

　　3. Make overall arrangements for the key tasks of capital market reform, development and stability, and unswervingly promote the high-quality development of the capital market

We have repeatedly emphasized that the capital market is an ecosystem with rich connotations and complex mechanisms. To do a good job in the capital market, we must take account of investors and financiers, listing and delisting, refinancing and share reduction, new and old shareholders, The dynamic balance of the relationship between institutional investors and individual investors, stock and increase, etc., find the greatest common divisor. We will always practice the people's nature of supervision, strengthen the concept of "big insurance", and put the protection of investors' rights and interests throughout the work of reform, development and stability of the capital market.

　　 (1) Increase investor activity. Enhancing market activity includes not only promoting more active transactions, but also attracting more investors, especially institutional investors, to improve the investor structure, and establishing an open, fair and just market order to better trust the market. We will continue to adhere to the direction of marketization and rule of law, based on increasing activity, optimizing transaction supervision, enhancing transaction convenience, and greatly improving transaction supervision transparency. At the same time, we will actively create conditions to unblock all types of funds, especially medium and long-term funds, to enter the market. The first is to further develop and expand the team of public fund managers. Since last year, we have promoted the reform of the access system for public funds, and market vitality has increased significantly. The amount of equity public offering funds raised in the first four months of this year was 430 billion yuan, 3.8 times that of the same period last year, which played an important role in improving the market structure and stabilizing the market. We will continue to increase policy support and guidance, and continue to promote the establishment of fund management companies by commercial banks. Support the innovation of equity fund products, further expand fund investment advisory services, and better meet the financial needs of public investors. The second is to continue to increase communication and coordination with relevant parties, promote the relaxation of the proportion and scope of various medium and long-term funds entering the market, and promote the implementation of the personal pension investment public fund policy as soon as possible. Promote the increase in the activity of equity investment in wealth management products of commercial banks. The third is to promote the improvement of institutional investors' taxation, performance evaluation, accounting and other supporting policy arrangements, and strengthen the concept of value investment and long-term investment.

　　 (2) Promote the reform of the registration system. The reform of the registration system is the general outline of this round of capital market reforms. It is a major reform that "will affect the whole body". It must adhere to the principle of seeking progress while maintaining stability and implement it step by step. In particular, all parties in the market need to actively participate and promote together. We have already piloted incremental registration reforms on the Science and Technology Innovation Board and accumulated certain experience. We are currently piloting the registration reforms for the stock market on the Growth Enterprise Market. The next step will be based on summarization and evaluation, and we will steadily develop the entire market in stages. Achieve the goal of the registration system reform.

　　 There are a lot of discussions on various aspects of the registration system. We believe that there are three principles that must be adhered to: respect the basic connotation of the registration system, learn from international best practices, and reflect Chinese characteristics and characteristics of development stages. The registration system must adhere to information disclosure as the core, so that the issuer, on the basis of meeting the basic issuance conditions, pays more attention to investor demand-oriented, truthful, accurate and complete disclosure of information; investors make investment decisions based on the information disclosed by the issuer prudently , To form a reasonable price, so as to more effectively play the decisive role of the market in the allocation of resources. It is necessary to combine international experience and market conditions based on national conditions, fully consider my country's market conditions, investment and financing balance, investor structure, and the rule of law and integrity environment, and scientifically grasp the quality of issuance and the relationship between registration and review. We must adhere to the concept of marketization and rule of law, and build a complete set of basic institutional arrangements for issuance and underwriting, trading, continuous supervision, delisting, and investor protection. At the same time, we will further strengthen the responsibilities of issuers and intermediaries, and implement more stringent interim and ex-post supervision. And more severe punishments for violations of laws and regulations.

　　 (3) Basic system reforms such as refinancing, shareholding reduction, and delisting. In terms of refinancing policy, since last year, in order to respond to market concerns and better meet the financing needs of entities, we have made two optimization adjustments, issued refinancing review standards, streamlined issuance conditions, optimized pricing and lock-up periods, and other arrangements. Strategic investors have been strictly defined. The main consideration for this is that while meeting the reasonable refinancing needs of listed companies, it can fully protect the legitimate rights and interests of small and medium investors. In the next step, we will continue to implement the concept of the registration system, focus the refinancing review on key issuance conditions, issue refinancing review guidelines in a timely manner, and enhance market predictability; promote refinancing classification review, and further optimize the private placement of high-quality listed companies Process, improve efficiency.

　　 Regarding the shareholding reduction system, all parties in the market have paid close attention to and argued a lot. Loose regulations will have an impact on the secondary market and affect the confidence of small and medium-sized investors; too tight restrictions will reduce market liquidity and affect capital entry, especially capital formation. In this regard, we have repeatedly studied and demonstrated and formed a phased reform plan. The specific consideration is to implement policies in different categories, step by step, and steadily adjust. On the one hand, continue to strictly regulate controlling shareholders, actual controllers, directors, supervisors, and senior executives to reduce their holdings; on the other hand, make appropriate openings and policies for venture capital funds and private enterprise relief. Refinancing policies that do not apply to the reduction of holdings have been introduced, and policies such as optimizing the reverse linkage of venture capital funds and moderately relaxing the transfer of agreements have also been released. In the future, we will continue to strengthen communication with the market and further evaluate and improve relevant rules to achieve a relative balance in all aspects.

　　 Regarding the delisting system, since last year, we have focused on unblocking diversified exit channels such as mandatory exit, restructuring exit, and voluntary exit. A total of 18 companies have achieved smooth exit, setting a record high. A virtuous circle of capital markets requires both ins and outs and the survival of the fittest. We will further improve the market-based legalized multiple delisting mechanism, improve the delisting standards, simplify the delisting process, and resolutely delist those that meet the compulsory delisting standards.

　　 (4) Strengthen the responsibility and capacity building of intermediary agencies. Intermediaries are the "gatekeepers" of the capital market, and they play an important role in the quality of sponsorship, accounting audit, compliance review, credit rating, etc., which are vital to the integrity of the capital market and protect investment. An important part of the reader. However, in practice, some intermediary agencies cannot keep up with their own corporate governance and professional capabilities, and cannot handle the relationship between business development and brand reputation, and perform their duties and perform their duties. Some intermediary agencies even give up their ethics and bottom line. Become an "outcaster" and a fake "accomplice". Since June last year, the China Securities Regulatory Commission has conducted on-site inspections on 86 companies that applied for the initial issuance, and the results showed that the phenomenon of "reporting with illness" is more serious. This is not only the company's own problems, but also reflects the problem of the quality of practice of relevant securities firms, accountants and law firms, some of which are industry leaders. We will take measures to deal with relevant intermediaries. Here I want to emphasize that the capital market is a common market for everyone, and various intermediary agencies must uphold the concept of co-construction, co-governance and sharing, care for this market together, and jointly create a sustainable development ecology. The China Securities Regulatory Commission will further improve the classified supervision of intermediary agencies and differentiated development ideas, increase policy support for good institutions, and support better, stronger and larger institutions; strengthen accountability for problem institutions and related responsible persons, improve the blacklist system, and truly Reflect rewards and punish the inferior. To meet the requirements of the registration system reform, we are working with relevant ministries and commissions to formulate regulations for the filing and management of intermediary agencies engaged in securities service business. While canceling the pre-approval, we will focus more on supervision during and after the event, and promote the healthy development of industry standards. At the same time, continue to promote the construction of an industry culture of “compliance, integrity, professionalism, and soundness”, improve the reputation restraint mechanism, and create a good industry ecology.

　　(5) Adhere to the two-way opening of the capital market. Implementing a high-level opening up to the outside world and promoting the optimal allocation of capital elements in domestic and overseas markets and higher levels are the unswerving development direction of the capital market. We will continue to promote the two-way opening of the capital market, and strive to realize the transformation from pipeline and single-point opening to institutional and systematic opening, to force reforms through opening up, and to promote development through opening up. At the same time, we will further strengthen the construction of regulatory capacity under open conditions, strengthen cross-border risk prevention and regulatory cooperation, and effectively achieve liberalization, visibility, and control. We reiterate that no matter what form it takes, no matter where it is listed, listed companies should strictly abide by relevant market laws and regulations, fulfill their information disclosure obligations truthfully, accurately and completely, and maintain a good image and reputation. Improving the quality of information disclosure of listed companies and protecting the legitimate rights and interests of investors are the common responsibilities of regulatory agencies in various countries. Deepening cross-border regulatory cooperation and resolutely cracking down on violations of laws and regulations are in the common interests of global investors. Regarding the suspected financial fraud and other issues of individual overseas listed companies recently, we are maintaining close communication with relevant overseas regulatory agencies, and will further strengthen cooperation in cross-border securities enforcement, audit supervision and other fields, and jointly promote and improve the international financial governance system.

　　 (6) Earnestly hold the bottom line of risk. Stability is an important prerequisite for the reform and development of the capital market. In the current situation of external uncertainties and increasing unstable factors, we must effectively strengthen bottom-line thinking, enhance awareness of danger, focus on preventing input and cross-cutting risks, improve response plans in various scenarios, and strive to achieve stable and healthy development of the capital market . At the same time, continue to do a good job in the prevention and disposal of risks in key areas. Regarding the risk of stock pledge, strengthen supervision and coordination, promote the interconnection of information on and off the market, and mutual consultation on prevention and control measures, and strive to have a new improvement in the overall effect. Regarding the risk of bond defaults, we will improve the market-based and legalized default resolution mechanism, take multiple measures at the same time, and achieve a smooth transition. Regarding the risks of private equity funds, we will accelerate the establishment of a risk prevention and disposal mechanism for inter-ministerial linkage and central-local collaboration, actively explore effective methods to address both symptoms and root causes, and effectively solve the “false private equity”“type of private equity”“chaotic private equity”, etc. Highlight the problem.

　　 Distinguished guests, friends! In order to further improve supervision and optimize services, the CSRC system is carrying out special activities for style construction of "dare to take responsibility, good supervision, excellent service, strong ability, practical results, and image display", focusing on solving prominent problems of formalism and bureaucracy. We will conduct a comprehensive review and targeted treatment, and strive to further enhance the service awareness of the conference system, further improve work efficiency, further strengthen accountability, and further demonstrate the quality and effectiveness of supervision. Everyone is welcome to supervise and put forward valuable opinions. We believe that this is also an important part of the "big insurance".

　　 Distinguished guests, friends! Protecting the legitimate rights and interests of investors is a fundamental work related to the high-quality development of the capital market, and it is inseparable from the extensive participation and strong support of all sectors of society. We will actively strengthen market communication, learn from investors with an open mind, and jointly build a mature and rational investment culture and a healthy and sound market ecology.

　　 Thank you everyone!