To further advance the comprehensive and strict regulation according to law, give full play to the front-line regulation role of stock exchanges and promote the cooperation and exchange between domestic and overseas exchanges, the “2018 International Seminar on Front-line Regulation by Stock Exchanges” was held at the Shenzhen Stock Exchange (SZSE) on September 21. The seminar was jointly organized by the SZSE and the Shanghai Stock Exchange (SSE), and its theme was the “Infrastructure of Front-line Regulation”. Li Chao, Vice Chairman of the China Securities Regulatory Commission (CSRC), was present and delivered a speech.

Li Chao said that the world economy is going through polarization and adjustment, the global capital market is encountering complicated development environment, and all parties should be concerned about and stand up for the market. A broad consensus on strengthening front-line regulation of the exchanges was achieved in the seminar of last year, showing that the front-line regulation is of extensive concern despite the difference in the development, market structure and regulation mechanism of the capital market of each country. Just as a Chinese saying goes, “From small beginning comes great things.” The front-line regulation institutions should keep adapting to the changes, improving regulation and laying a solid foundation. The CSRC has taken a series of measures to strengthen the infrastructure of front-line regulation since last year. First, it has promoted the see-through regulation, implementing the north-bound see-through mechanism for the Shanghai - Hong Kong Stock Connect and Shenzhen - Hong Kong Stock Connect and realizing the connection between the see-through regulation and the indirect holding system. Second, it has intensified exchange members’ management over clients’ trading behavior, urging them to perform the client management duty and building up a solid first line of defense. Third, it has accelerated the construction of regulation technology, making full use of technical means to monitor market risks and accurately cracking down on illegal behaviors. The capital market can only be filled with vigor and vitality by steadfastly advancing the reform and opening-up. The CSRC will continue to promote the reform and opening-up of capital market with greater efforts and expand the domestic-foreign cooperation according to the marketization, legalization and internationalization orientation, thus facilitating the sound development of the capital market.

At the seminar, all exchanges have engaged in an in-depth discussion on giving better play to the role of front-line regulation and introduced their experiences in improving the see-through regulation system, displaying members’ role in exchange’s regulation and promoting technical regulation. They believed that the rapid market development has raised higher requirements on the front-line regulation capacity of exchanges, strengthening infrastructure construction is of great practical significance to improving exchanges’ front-line regulation function, and it is necessary and extremely urgent to analyze and discuss the see-through regulation, members-oriented regulation and technical regulation as an organic integrity. See-through regulation is an important means conforming to the development trend of the stock market regulation, and the roles of members should be well displayed to form joint efforts on regulation with the exchanges. Currently, cutting-edge technologies like big data, cloud computing, machine learning and artificial intelligence are still making progress. All exchanges should pay more attention and embrace scientific and technological innovation, enhance their technical regulation capacity, enrich their technical regulation methods, and intensify information sharing and cross-border cooperation on regulation, thus jointly preventing and resolving market risks, maintaining the justice, efficiency and transparency of the market, and protecting legitimate rights and interests of investors.

Next, the SZSE and the SSE will continue to perform their front-line regulation duty, increase input in regulation infrastructure, strengthen the research on cutting-edge issues in regulation, and draw from the successful experience and advanced practices of all exchanges. In this way, they will further improve the regulation system, enhance the regulation capacity, improve the regulation efficiency, optimize the regulation cooperation mechanism, and earnestly safeguard the sound and stable operation of the market, thus providing a good market environment for domestic and foreign investors to participate in the Chinese capital market.

Also delivering speeches at the seminar were officials of the CSRC, the World Federation of Exchanges and the Shenzhen Municipal Government, and chiefs of relevant departments and institutions, as well as representatives of 11 exchanges, i.e., SSE, SZSE, Bombay Stock Exchange, Bursa Malaysia, Deutsche Borse, Euronext, Hong Kong Exchanges and Clearing Limited, Korea Exchange, London Stock Exchange Group, Luxembourg Stock Exchange and NASDAQ.