One year after announcing the establishment of the Sci-Tech Innovation Board and 100 days after its operation, Yi Huiman, chairman of the China Securities Regulatory Commission (CSRC) accepted a special interview with Xinhua News Agency and CCTV-2 to explain how to promote the Board to the whole A-share market and how to comprehensively advance the reform of the capital market. Yi said that after the opening of the Board, preliminary outcomes have been seen and it keeps in line with the expectation and remains basically stable"; in a hundred days of trading, the stock price fluctuates and I think it is quite normal. As a result of the game, some companies see certain regression and divergence. The Green Legal Global Alliance Research Institute organizes the interview contents and pays close attention to the direction and new measures of the capital market reform. 

Key point I: The Sci-Tech Innovation Board runs stably as expected. 

When it comes to the outcomes after the establishment of the Sci-Tech Innovation Board, Yi said this board is given two missions as it is not just a simple board in the capital market. Its first mission is to find ways to employ the capital market to boost economic innovation. Its second mission is to promote the basic system reform of the capital market and play a good role of a test field. 

After the Board is put into service, all market participants have responded actively and the whole market operates steadily. A range of institutional innovations has also got inspected by the market. 

Yi said that after the opening of the Board, preliminary outcomes have been seen and it keeps in line with the expectation and remains basically stable. First, the value of listed companies on the Board is well reflected. Specifically, the first batch of 25 listed companies, including those listed later, have seen rising share prices as a whole, more than double the issue price, which is also the pricing given to these companies by the market and the rediscovery of their value. Second, I think it is well received by market investors. Third, the overall share price after getting listed changes in a reasonable range. In a hundred days of trading, the stock price fluctuates and I think it is quite normal. As a result of the game, some companies see certain regression and divergence. Fourth, I think, the market runs in good order. In the past hundred days, no major violations have been found. 

By the end of October, Shanghai Stock Exchange has accepted 168 applications for listing on the Board, of which 40 have been listed. Based on the information of these enterprises, the proportion of their R&D investment and R&D personnel is 11% and 31% on average respectively in 2018, both higher than those in other boards. 

Key point II: It takes less than four months from application to registration on the Board on average. 

According to Yi, the pilot registration system is the biggest institutional breakthrough in the reform of the Board and represents the vane of the reform of the whole capital market. It exerts an overall impact on the capital market reform. Over the past 100 days since the operation of the Board, the pilot registration system has remained stable and orderly. In the reform, by centering on information disclosure, the issuers, intermediaries and exchanges have been promoted to fulfill their respective duties, each link in the examination, approval and registration has been made open and transparent and the actual effect has been recognized by the market. At present, it takes less than four months on average to application to registration. 

A series of basic system reforms matching the registration system have also stood the test of the market. New institutions such as when-issued trading, investor suitability management, exit mechanism and continuous supervision have functioned stably and orderly. 

"Another major breakthrough of the Board is that it has supported a number of enterprises in line with the positioning of science and technology innovation to get listed, producing an initial effect of supporting science and technology innovation", Yi said. Up to now, Shanghai Stock Exchange has accepted 168 applications to go public in the Board, of which 84 have passed the examination, and 60 have been registered by the CSRC. Some enterprises in the Board are leaders in subdivision fields and the growth rate of their performance is significantly higher than that of the whole market. The credit enhancement effect, reputation effect and demonstration effect from getting listed begin to emerge. "I believe after a period of time, the Board will foster great high-tech companies." 

Key point III: Expedite the GEM reform and pilot the registration system. 

When it comes to how the Board will play its role as a test field, Yi pointed out that we should not copy others' practices without change to give play to the role of the Board as a test field. The CSRC will harmonize the functional positioning of all levels of the market and advance the reform in a stable and orderly manner after full evaluation and demonstration to ensure the market stability based on the market reality, Yi said. 

He said, we should give top priority to steadily implementing the registration system, let the market decide and improve the efficiency of resource allocation in the capital market to a greater extent. "We should speed up the reform of the Board, pilot the registration system, and study and promote it based on the revision of the Securities Law." 

According to Yi, the experience of the Board will also be drawn on in the reform of the basic systems of the capital market. 

In the process of issuing and underwriting, the responsibilities of intermediaries will be consolidated and a mechanism of inquiry, pricing and distribution with institutional investors as the main participants put into place to let the market price new shares. In the trading process, the price limit will be relaxed and such market stabilization mechanisms as temporary trading halt and "price cage" will be improved and perfected accordingly. The mechanism of margin trading will be optimized and the balance between long and short positions promoted. In the process of continuous supervision, the quality and pertinence of information disclosure will be improved, and a supervision concept centering on information disclosure established. Merger and reorganization will be examined and approved by the exchange and the registration system will apply where the issue of shares is involved. New ways of delisting will be developed to optimize the delisting index and simplify the delisting process. 

As to the relationship between incremental reform and stock reform, he said that "the incremental reform and stock reform at the same time will make us confront a more complicated situation and higher requirements. We should adhere to the bottom-line thinking, drive up the stock with increment and at the same time take into account the actual situation of the stock to progress steadily in a stable environment as expected by the market." 

Key point IV: 4 opening initiatives will be introduced this year. 

When it comes to the opening up of the capital market, Yi mentioned that as restrictions on the ratio of foreign shares of securities, funds and futures companies are progressively relaxed, China's capital market has further opened up in the fields of products, institutions and services. As the connectivity mechanism is constantly improved, foreign investors have paced up in their investment in and further engaged in the A-share market. Meanwhile, an increasing number of A shares have been listed in internationally renowned indexes, such as MSCI, S&P Dow Jones Indices and FTSE Russell. 

"China's capital market is greeted with an increasing number of channels to "go out" and "bring and has its influence constantly improved. This fully shows the confidence of international investors in the reform of China's capital market and long-term sound development of China's economy", said Yi. 

According to him, five of the nine opening-up initiatives announced at Lujiazui Forum in July have been implemented and the other four will also be implemented by the end of the year. Specifically, the QFII and RQFII regulations and rules will be further revised; the H-share full circulation work guidelines will be released as soon as possible; investment channels for foreign institutional investors to the exchange bond market will be expanded; the range of varieties of special futures will continue to be expanded and intensified efforts will be made to introduce foreign traders. Besides, we are stepping up efforts to revise and improve supporting regulations and restrictions on the ratio of foreign shares of securities, funds and futures companies will be lifted next year. 

"The opening of the capital market is not just for opening up. It aims to integrate into the global financial market and, more importantly, to push forward reform." Yi said that while opening up, we must strengthen risk management and control for proper relaxation, transparency and management. 

Source | Securities in China, cctvyscj, finance.sina.com.cn