It should take a tougher stand in checking irregularities such as market manipulation, inside trading, fraud in stock issuance, mendacious capital restructuring, and disclosure and dissemination of false information, the report said.

The report was put together by four groups of senior legislators who visited Shanghai, Shenzhen, Wuhan and Chengdu between mid-May and early June to check the performance of the 2-year-old law.

The report cited the case of Yorkpoint SetT Co Ltd as lack of efficiency of the securities watch dog in checking irregularities.

The commission imposed fines worth a total of 449 million yuan (US$54 million) on four Guangdong based securities investment consulting companies for stock market manipulation in April.

The four companies were caught cross-trading to manipulate the price of A-share Yorkpoint SetT Co Ltd.

The stock of the firm surged to a record of 126.31 yuan (US$15.27) a share (with a face value of 1 yuan) last February from 5.6 yuan (US$0.67) in August 1998.

However, the report said suspicious stock price fluctuations were found by the Shenzhen Stock Exchange more than a year before the illegal trading was punished.

The report demanded the commission increase transparency in information disclosure and increase transaction safety as well.

It also required a quality improvement of listed companies and the self discipline of intermediary agencies to avoid illegal speculation and market manipulation.

The Securities Law was adopted by the NPC Standing Committee in December 1998 and came into force in July 1999.

It was taken as a milestone for the development of China's stock market which has more than 1,100 listed companies and a total market value of nearly 5 trillion yuan (US$604.5 billion).

Beijing, Guangzhou, Xiamen, Lanzhou and Harbin conducted their own inspections on the performance of the law as well, said NPC sources.

(China Daily 06/29/2001)