The China Securities Regulatory Commission has received central government’s nod of approval on its plan for internal reorganisation. As part of the plan, the securities regulator will introduce four new divisions to oversee corporate bonds issuance, innovative businesses, private funds and illegal securities or futures activities.
In a press statement published on its website last Friday, CSRC announced the central government’s approval on its restructuring plan that will merge eight existing divisions into four, while establishing the above said four new divisions. It says the reorganisation plan is in line with China leadership’s directive to engage in deep structural reforms that will support further opening up, and an important step towards regulatory reform.
“The proposed new divisions reflect the current needs of the market, especially increasing corporate bond issuances and innovative products”, said Sandra Lv, a financial services lawyer and a partner with Llinks Law Offices, based in Shanghai. Noting the CSRC restructuring as a positive development, Ms Lv also added, “A division dedicated to innovative businesses will enhance the focus and professionalism of the CSRC in looking at more and more forms of innovation.”
While the four existing merged divisions mainly consolidate CSRC’s regulation over IPO, listed companies, funds and futures businesses respectively, the four new divisions may also be seen as a significant step that the regulator is taking to address growing concerns of shadow banking and alternative financing in China.
Recently, the CSRC indicated it is working with the China banking regulator to review and study potential regulatory framework for the rapidly expanding online financial services market. Internet platforms such as Alibaba, Baidu and Tencent have launched online financial services products and raised jaw-dropping sums, especially Alibaba’s YuE-Bao with its reported 400 billion yuan (USD65.8 billion) success. While these are regarded as positive innovation, the legality and regulatory challenges of such schemes are hotly debated.
No specific timeline is provided for the restructuring, although the CSRC says it is working to finalise functional details of the various divisions as soon as possible.