China to push ahead with new securities law 

Delays to NPC gathering and virus upheaval won’t slow passage of key reforms

by Chris Gill
China to pushes ahead with new securities law 
Chinese President Xi Jinping talks to medical professionals treating patients in Wuhan via video. The leader has not visited the contagion epicenter since the outbreak began. Photo: Xinhua

(ATF) – Despite delays caused by Covid-19, Chinese officials are still determined to implement new securities laws by next week.

Other changes to capital markets are also being accelerated, though real change will happen in a step-by-step process over an unspecified period, according to a report in the China Securities Journal.

The China Securities Regulatory Commission (CSRC) recently issued its "Decision on the Abolishment of Certain Securities and Futures Regulatory Documents" and the China Association of Investors formulated a work plan for the implementation of the new law, the Journal reported. 

Because China’s latest meeting of its National People’s Congress (NPC) was delayed over Covid-19 restrictions on group gatherings, it had been thought that the changes would be delayed. 

But behind closed doors experts said the changes are “imminent”, the Journal reported.

The biggest expected changes are to “improve the quality of information disclosure” and the new securities law will include major alterations to the registration system. Eighteen old laws must be abolished to implement the new one. 

"In order to ensure that the new securities law takes root, we must promptly clean up administrative regulations, departmental rules, and self-discipline rules that are inconsistent with the securities law, and do a good job in time,” the official report read.

Ye Lin, director of the Research Center for the Rule of Law on the Business Environment at the Renmin University of China, believes that the new securities law demonstrates the determination of authorities to enhance the degree of marketization of securities, so many of the original rules should be adjusted and changed accordingly.

Despite talk of speedy reform the CSRC said the measures should be taken “step-by-step”. One of the other major overhauls will be to increase the responsibilities of credit rating and auditing firms. Accounting firms will see their civil liabilities increase, too.

Senior sources told the Securities Journal that reforming the registration system – a priority of the the new securities law – would be a gradual process. The law would also authorize the State Council to specify the scope and implementation steps of the registration system for securities issuance. 

Ye Lin said "it is expected that it will take some time for the GEM, especially the main board (small and medium-sized board), to implement the registration system.