The comprehensive registration system reform launched the capital market and achieved a key leap
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With the official launch of the full implementation of the reform of the registration system for stock issuance, China’s capital market has realized the start of the pilot registration system, expanded the stock and then implemented it in the entire market, and further improved the basic market system. The main board, science and technology innovation board, ChiNext and Beijing Stock Exchange and other market sectors have a clear division of labor and clear positioning, and the multi-level capital market system has been further improved. The registration system gives the market the right to choose, the relationship between the government and the market is more reasonable, and the boundaries are clearer. In general, through this reform, China’s capital market has achieved a major leap, and the comprehensive deepening reform of the capital market has entered a new era.
all covered
Realize the leap from the approval system to the registration system
The China Securities Regulatory Commission stated that the main sign of the full implementation of the stock issuance registration system is that the institutional arrangements are basically finalized, covering national securities trading venues, and covering various public offerings of stocks.
In terms of coverage, the unified registration system arrangement of this reform is fully implemented in all market segments of national stock exchanges. Integrate the pilot registration system rules of the Shanghai Stock Exchange and the Shenzhen Stock Exchange, formulate unified initial public offering stock registration management methods and listed company securities issuance registration management methods, and the registration system rules of the Beijing Stock Exchange are generally consistent with the Shanghai Stock Exchange and the Shenzhen Stock Exchange. The Exchange formulates and revises the Exchange’s unified business rules for stock issuance and listing review.
Reviewing the registration mechanism is the key content of the registration system reform. This reform further strengthens the main responsibility of the exchange for issuance and listing review. The exchange conducts a comprehensive review of whether the company meets the requirements for issuance, listing and information disclosure. The China Securities Regulatory Commission makes a decision on whether to approve the registration based on the review opinions of the exchange.
According to public information, since the establishment of the A-share market at the end of 1990, after more than 30 years, the issuance system has gone through a stage of transition from an approval system to an approval system, and then to a registration system. The full implementation of the reform of the stock issuance registration system is exactly the “key leap” in the reform process of the issuance system over the past 30 years.
At the end of 2013, the Third Plenary Session of the 18th Central Committee proposed to “promote the reform of the registration system for stock issuance”, and the registration system was written into the central document for the first time. In 2018, the Science and Technology Innovation Board was established and the registration system was piloted. In 2020, the pilot reform of the registration system will officially move from the incremental market to the stock market (GEM). In 2021, the Beijing Stock Exchange will open and pilot the registration system.
According to CICC research, after four years of pilot projects, as of the end of January 2023, a total of 1,004 companies have passed the registration-based listing system in the A-share market, with a total market value of 9.6 trillion yuan, accounting for 19.8% and 10.5% of the overall A-share market respectively. %. After the pilot reform of the GEM registration system, the average time required for new shares to be listed has been shortened from the previous 520 days to about 380 days, and the issuance efficiency has increased by about 27%.
The China Securities Regulatory Commission stated that this reform will further improve the basic system of the capital market. Mainly include: improving the issuance and underwriting system, restraining irrational pricing; improving the trading system, optimizing the margin financing and securities lending and refinancing mechanism; improving the independent director system of listed companies; improving the normalized delisting mechanism and smoothing multiple exit channels; accelerating investment-side reforms, Introduce more medium and long-term funds. At the same time, support the national stock transfer system to explore and improve the basic system that is more in line with the characteristics of small and medium-sized enterprises.
Dong Dengxin, director of the Finance and Securities Research Institute of Wuhan University of Science and Technology, told reporters that the full implementation of the stock issuance registration system is an important improvement in the basic system of the capital market. After the entire market covers the registration system, the ecological environment of the entire capital market will undergo major changes. He said that before full coverage, the distribution system of the entire market is not unified, which is not conducive to the establishment of a unified large market. After comprehensive coverage, the pricing of new shares will be more market-oriented, which will prompt all market participants to perform their duties. Investors also need to establish risk awareness and improve their ability to distinguish.
Li Huiyong, general manager of the research department of Changjiang Pension Insurance Co., Ltd., told reporters that the full implementation of the stock issuance registration system is of great significance. The development of China’s economy is inseparable from the support of the capital market. The full implementation of the registration system will help to further increase the proportion of direct financing, and help more companies, especially new economic companies that represent the future of China’s economy, to raise funds from the capital market and improve The role of the capital market in China’s high-quality economic development and structural transformation.
Reshape the market ecology
Clear plate positioning
After more than 30 years of reform and development, my country’s stock exchange market has gradually expanded from a single sector to multiple levels, and a market pattern of dislocation development and complementary functions has basically taken shape. The full implementation of the reform of the stock issuance registration system will promote the formation of a clearer multi-level market structure.
According to reports, after the reform, the main board should highlight the blue-chip characteristics of the large market, and focus on supporting high-quality enterprises with mature business models, stable operating performance, large scale, and representative industries. After the reform of the main board, the multi-level capital market system will be clearer, covering basically different industries, different types, and different growth stages of enterprises. The main board mainly serves large-scale enterprises in the mature stage. The Science and Technology Innovation Board highlights the characteristics of “hard technology” and plays the role of “experimental field” for capital market reform. The GEM mainly serves growth-oriented innovative and entrepreneurial enterprises. CBEX and the National Equities Exchange and Quotations jointly create a position for serving innovative small and medium-sized enterprise owners.
Li Huiyong said that the different levels of market systems of the Main Board, Science and Technology Innovation Board, Growth Enterprise Market and Beijing Stock Exchange correspond to the financing needs of enterprises in different periods, different business development, and different development stages.
The full implementation of the stock issuance registration system will also further optimize the ecology of the capital market and improve the survival of the fittest mechanism. Since the pilot registration system, the survival of the fittest mechanism in the capital market has become more complete, the structure of listed companies, the structure of investors, and the valuation system have undergone positive changes. The proportion of technology companies and the proportion of professional institutional transactions have increased significantly. There is a trend of high quality and high price in both values. The market order has become more standardized, and the awe of the issuers and intermediaries towards the market has increased significantly.
Dong Dengxin pointed out that from the perspective of the market structure, especially the level of listed companies, with the advent of the era of full implementation of the stock issuance registration system, the entire market will be more inclusive of high-tech, high-growth, new business models, and companies with strong R&D capabilities. The structure of the entire listed company will undergo major changes: the capital market will be able to better reflect the development trend of China’s economy and better match the transformation direction of China’s economy. With the improvement of market efficiency, the vitality of the market will be further stimulated, the ability of the capital market to drive innovation will be further exerted, and its ability to serve the real economy will also be further enhanced, so as to implement the “improving the function of the capital market, Increase the proportion of direct financing” requirement.
Adjust government-market relations
leave the option to the market
The essence of the reform of the registration system is to hand over the right of choice to the market and strengthen market constraints and legal constraints. In the final analysis, it is the adjustment of the relationship between the government and the market. Compared with the approval system, it not only involves the change of the review subject, but more importantly, fully implements the concept of information disclosure as the core, and the whole process of issuance and listing is more standardized, transparent and predictable.
Li Huiyong said that from the perspective of the relationship between the government (regulation) and the market, regulators should ensure the benign operation of the capital market through the construction of financial infrastructure, the improvement of the rule of law in finance, and the punishment system for illegal acts, so as to fully utilize capital. The functions of market pricing and resource allocation protect the interests of small and medium investors and realize the benign interaction between the economy and the capital market. In the early stage of the development of the capital market, the boundary between the government and the market was not clear enough, leading to overregulation and absence of supervision, which often brought a series of problems. The implementation of the comprehensive registration system enables regulators to return to their duties of supervision, which is an important change brought about by the full implementation of the reform of the stock issuance registration system.
The China Securities Regulatory Commission also stated that the reform of the registration system is a profound change involving regulatory concepts, regulatory systems, and regulatory methods. The China Securities Regulatory Commission will insist on putting political construction in the first place, emphasize politics with a clear-cut stand, actively adapt to the new situation and tasks, deepen the reform of “decentralization, regulation and service”, accelerate the transformation of supervision, and shift the focus of work to overall planning and coordination, rule formulation, supervision and inspection, and order Management and environment should be created to effectively improve supervision capabilities and strengthen interim and post-event supervision.
The China Securities Regulatory Commission emphasized that the China Securities Regulatory Commission and the stock exchange insist on conducting audits with open doors. The whole process is open and supervised. There is no “special channel” and the normal communication channel with market players is open. Engage in benefit transfer and act as a “broker”. In the next step, the issuer’s integrity commitment mechanism will be established, the construction of intermediary agencies’ integrity will be further promoted, and bribery and bribery will be investigated together, so that the briber “illegally breaks the law in one place and is restricted everywhere.” In this regard, don’t take any chances, or you will pay a heavy price.
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