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E-mail China.org.cn, March 22, 2024
China Securities Journal:
The Central Financial Work Conference emphasized the need to comprehensively strengthen financial supervision and effectively prevent and defuse financial risks. You just mentioned the opinions (tentative) on strengthening supervision of securities companies and public funds to accelerate construction of first-class investment banks and investment institutions. According to the opinions, what important measures should be taken to enhance supervision of sponsor institutions and make sure investment banks fulfil their responsibilities as "gatekeepers". Thank you.
Shen Bing:
Thank you for your question. The supervision and professional quality of sponsor institutions are the general concerns of business entities. As a supervisory body, the CSRC urges intermediaries including investment banks to fulfill their responsibilities and truly play their role as "gatekeepers." This is not only the deep expectation of investors, but also a critical element to improve the quality of listed companies at the source and to promote high-quality development of the market. Based on the opinions you just mentioned, I would like to introduce some relevant measures in supervision of institutions. The supervisory efforts can be summarized as implementing strict supervision, strengthening accountability and functions, and optimizing the ecosystem.
In terms of strict supervision, we have made it clear in the mechanisms and rules that problems such as "IPOs withdrawal after investigation" must be investigated to the end and the person responsible shall be held accountable. In daily supervision, we pay special attention to the prominent issues that are of great concern to the market such as relatively high withdrawal-and-rejection rate and dramatic changes in performance. We strictly implement the principle of "declaration means taking responsibility" and urge sponsors to effectively strengthen internal control and perform verification and inspection responsibilities. We also strengthen information sharing and coordination of supervision and law enforcement in on-site inspections to improve supervisory synergy and effectiveness.
In terms of strengthening accountability, Mr. Li Chao has just made some introductions. We must adhere to see-through supervision and comprehensive accountability, implement dual penalty for institutions and personnel, and make good use of qualification penalty and maximum punishment and other practices in accordance with the law. In particular, penalties will be increased for investment bank directors and senior executives who are responsible for violations to laws and regulations, even including general managers and companies' chairmen. In accordance with the law, we strictly investigate and deal with intermediaries and their employees suspected of committing serious illegal conducts, especially those involving facilitating fraud, and those suspected of committing crimes will be transferred to judicial authorities. We will truly and thoroughly implement the three-dimensional accountability system covering civil, criminal and administrative responsibilities.
In terms of strengthening functions, investment banks are urged to put functionality first, take it as their responsibility to serve the high-quality development of the real economy and protect the legitimate rights and interests of investors, strengthen the construction of core capabilities of investment banks, such as project screening and evaluation and pricing, and recommend truly high-quality companies to the market and investors while firmly blocking those problematic companies from the market.
In terms of optimizing the ecosystem, the professional quality of investment banks will ultimately be reflected in the quality of sponsored listed companies. We attach great importance to the existing classified evaluations of securities companies and the assessment mechanism of investment banking businesses, so that they can truly play their influencer role. In addition, we will improve the system for disclosing negative reviews of sponsor representatives to truly tighten reputation constraints. At the same time, we will strengthen supervision for the integrity of investment banks and their employees, and focus on fighting prominent problems such as improper shareholding and transfers of interests. We set up and improved the comprehensive disciplinary mechanism for bribers, so the black sheep in the sector can be rejected and restricted all around, creating a clean and healthy industry ecosystem. We will fully implement the spirit of the Central Financial Work Conference, pay close attention to the implementation of the opinions, further implement the requirements of intensifying efforts in supervision, and urge intermediaries to play their role as "gatekeeper," making sure listed companies are truly qualified. Thank you.
