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Discipline and innovation are to be beefed up by the new leadership of the Securities Association of China (SAC) as the country's stock market enters its transitional period towards market-orientated operation.
The onus will be on securities businesses to ensure against action that would flout international and domestic standards.
Zhuang Xinyi, a former vice-mayor of Shenzhen and awaiting chairman of the SAC, said the association urges fund management firms and other securities consultancies to expand their business and upgrade services to meet investor demand.
He is expected to formally take the chairmanship today after a general vote at the ongoing SAC members' conference in Beijing.
As the regulatory organization for the securities industry in China, SAC will draw up more rules regarding industrial ethics, innovation and risk management, he said. These will guarantee better securities services, upgrade the public image of the industry and prevent potential risks.
SAC will also shoulder aspects of the regulatory function of the China Securities Regulatory Commission (CSRC) in the future. This will include the training of securities analysts, their qualification assessment and parts of the regulatory work.
Also topping the agenda of the association is the construction of a database to record information about securities analysts and brokerages and their misconduct, said Zhuang
"SAC is facing crucial reform to enhance its role in the securities industry as China is adopting more market-orientated practices to build a mature stock market," said Zhou Xiaochuan, chairman of CSRC, China's securities watchdog.
"The change will be beyond people's imagination."
The association will try to handle disputes among securities businesses and give more advice to the government on reform, he said.
Growing calls for risk control need to be met with a better regulatory framework to monitor misbehaviour in securities brokerages and among fund managers. And SAC should come up with detailed and practical rules to curb such problems, he said.
China currently has 118 securities companies, with total assets of 581.7 billion yuan (US$70.3 billion), representing a 172 per cent growth on five years ago. And there are 17 fund management companies operating 56 close-ended and open-ended funds.
Other members of the SAC include domestic securities investment consulting companies.
Innovation, as well as risk control, is very important for securities businesses and better service and more variety of products will bring more income sources.
Yu Buyue, general manager of the Fayhoo Securities Investment Consulting Company, said securities consulting companies need to expand their business scope and develop more services to attract customers, like asset management and fund business.
"We have good resources of expertise and personnel," said Yu.
"It is likely that senior management will give us more support for innovation."
Overseas securities companies are closely watching moves by the SAC, hoping for better communication with their counterparts on the Chinese mainland and a better foothold in local stock market.
David Lin, chief representative of the Taiwan international Securities Corporation in Shanghai , said he was optimistic that a more open stock market would emerge.
(China Daily July 3, 2002)
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