The China Securities Regulatory Commission (CSRC) vowed on
December 30 to improve the transparency of its work and the overall
capital market in 2005 to ensure efficiency of reforms and to curb
corruption.
Investors are expecting greater public scrutiny of the listing
approval committee, more disclosure in the policy-making process of
regulators and stronger supervision over operational transparency
of listed firms, according to CSRC Chairman Shang Fulin.
"The year 2005 will be a crucial year for capital market reform
and development," he said.
The CSRC will further implement reform plans mapped out by the
State Council in 2004 regarding the capital market and steadily
open up the market.
Strong protection of the interests of investors will be a
priority for the reforms.
"It calls for the delivery of truthful, objective and accurate
information to the market and a more developed credit culture,"
said Shang at a media briefing on Thursday in Beijing.
CSRC Vice Chairman Tu Guangshao said that the commission would
increase interaction with the media and the public in 2005. This
will include offering more detailed policy introductions to
investors and taking more interviews from the media.
The stock and futures exchanges and related organizations should
also increase disclosure and listed companies are urged to improve
transparency.
The CSRC, the watchdog for one of the world's fastest growing
capital markets, has attracted intense public attention, especially
since China joined the World Trade Organization (WTO) at the end of
2001 and gradually opened its capital market.
But commission officials have remained very low profile, though
the reforms they design may trigger sharp movements in the
bourses.
Last year, the CSRC introduced more than 20 major policies on
the stock issue system, trading, supervision of listed firms,
disposal of risky securities houses and financial innovation.
More reforms are expected this year to improve the efficiency of
fund-raising activities and the overall capital market and to
better protect investors' interests, said Shang.
The transparency enhancement program has already had an effect
on the CSRC's listing approval committee, which reviews and
approves the listing applications of domestic companies. The
committee was reorganized last Thursday in Beijing.
It now has 16 new members made up of lawyers, accountants, fund
managers and scholars.
The 25-member committee is to have new members appointed at the
end of each year.
Other members include CSRC officials, representatives of other
government departments and securities businesses, including
qualified foreign institutional investors.
CSRC introduced the present structure of the listing committee
at the end of 2003.
The names of the members that review each stock or bond issue
application have been released on CSRC's website each time to
ensure transparency, but some listing applicants try to communicate
with members outside the office to have their plans approved.
Such activities, however, will be punished severely, a CSRC
spokesman said last Thursday.
He said the commission would adopt more market-oriented rules
and try to weaken the role of administrative approvals. The listing
review system will also be reformed, with greater public scrutiny
for the review process.
Public disclosure of corruption is welcome, the spokesman
said.
The CSRC listing committee held 58 meetings to review 177
listing applications in 2004. Only about 67 percent of the
applications were approved last year, compared with 78 percent in
2003.
As well as enhancing the fight against corruption, the CSRC has
also pledged to create legal access for normal communications
between listing committee members and the listing applicants, such
as giving the latter more opportunities to introduce their
enterprises and respond to problems raised during the reviews.
(China Daily January 4, 2005)