China tightens crackdown on capital market violations

A staff member walks past the Shenzhen Stock Exchange in Shenzhen, south China's Guangdong Province, Sept. 21, 2020. [Xinhua/Mao Siqian]

BEIJING -- China has tightened crackdown on illegal activities in the securities market to promote the high-quality development of the country's capital market.

Efforts to improve the securities legislation mechanism will be enhanced, and criminal punishment and market discipline will be strengthened, according to an official document jointly issued by the General Office of the Communist Party of China Central Committee and the General Office of the State Council.

The document specifies targets for upgrades of the securities law enforcement and judicial systems by 2022 and 2025, respectively. The targets include curbing the frequent occurrence of major illegal and criminal cases, and making notable advances in the transparency, standardization and credibility of the securities law enforcement and judicial systems.

Tang Xin, a professor with the School of Law at Tsinghua University, said the document will be a key factor in capital market legalization as it has set specific schedules for the formulation and revision of laws and regulations, and has provided supplementary measures to guarantee the implementation of the laws and policies.

Due to system design shortcomings and the subsequent low cost of committing a crime, it was not unusual that some listed firms have taken advantage of the loopholes to engage in illegal acts such as financial fraud, insider trading and market manipulation.

Thus the document calls for improved investigation, inspection and trial mechanisms.

The country should strengthen its cross-border oversight of law enforcement and judicial cooperation, and step up efforts to build up the credit system in the capital market, according to the document.

Setting out powerful and targeted measures, the document aims to purify China's capital market and bolster investor confidence, said Han Qian, a professor with the School of Economics at Xiamen University.

In an exclusive interview with Xinhua, Yi Huiman, chairman of the China Securities Regulatory Commission, said the document would provide an essential guarantee for comprehensively deepening capital market reform and promoting its high-quality development.

The country will strictly and promptly investigate and deal with major criminal cases such as fraudulent issuance, market manipulation, insider trading, and fabricating and disseminating false information, he said.

Over the next three to five years, China's securities regulators will strive to fully implement the tasks set out in the document and provide a solid legal guarantee for the development of the capital market, he added.