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)