CSRC head takes aim at systemic risk

By Wang Jiamei Source:Global Times Published: 2016/9/11 20:13:39

Official reiterates pledge to maintain stability

The head of China's securities regulator reiterated on Saturday that the bottom line of no systemic risk must be defended, signaling that risk control will remain a top priority for the country's financial markets.

As the most sensitive aspect of China's economic and financial security, the development of the capital market must ensure secure and stable operation to best protect the fundamental interests of the public, Liu Shiyu, chairman of the China Securities Regulatory Commission (CSRC), said at the seventh members' meeting of the Shanghai Stock Exchange (SSE) on Saturday.

With the participation of representatives from 112 SSE members, which are the securities companies who are members of the SSE, the meeting marked the first such event since 1999.

Alongside the bottom line of no systemic risk, Liu also emphasized strict and comprehensive oversight over China's capital market, protection of the legitimate interests of investors, implementation of international and market-oriented reforms as well as the principle of serving the real economy.

"It is very dangerous for the capital market to see money always flow into the virtual economy instead of the real economy, which should be corrected," Liu noted.

He also mentioned that China's capital market is unlikely to have institutional investors as the main body of investors in the near term, so it is crucial to protect the legitimate interests of small investors.

Liu's remarks showed that a strict regulatory environment will continue to be the main tone for the securities market in the future, said a securities analyst surnamed Li, who preferred to keep his full name anonymous.

"There are currently a number of uncertain factors facing the Chinese economy, such as the ongoing economic transformation, slowing economic growth, the yuan's inclusion in the special drawing rights and the impact of the Fed's interest rate hike. Against such a backdrop, stability is the most crucial issue in the financial markets," Li told the Global Times on Sunday, noting that regulators have recently taken a cautious approach to market risks, because they don't want to see the market plummet like it did last summer and earlier this year.

The benchmark Shanghai Composite Index lost about 40 percent over the summer of 2015 and another 20 percent in January.

At the Saturday meeting, Liu also disclosed that the SSE is currently accelerating a study of a possible Shanghai-London stock connect scheme now that the Shenzhen-Hong Kong Stock Connect program is set to launch by the end of this year.

Since taking office in February, Liu has been strengthening regulatory oversight in the securities market by clamping down on speculative investment linked to shell companies and investigating into brokerages and securities firms.

According to a report in the Dazhong Daily, Liu had a meeting on Wednesday with Guo Shuqing, governor of East China's Shandong Province and former head of the CSRC, in Jinan, Shandong.

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