Road map for financial reform: PBOC governor(2)

A multi-layer capital market system will be built

Efforts will be made to raise the country's direct financing proportion, push for reforms of the stock issuance registration system, promote multi-channel equity financing, develop and standardize the domestic bond market, as well as improve insurance market and encourage financial innovation.

1.To raise the ratio of direct financing.

Vigorous efforts will be made to push for the transformation of the country's economic development mode and economic structural adjustment, and develop the stock, bond and other capital markets. There will also be vigorous efforts to expand the direct financing channels for enterprises and to optimize the structure of social financing. The market-oriented reform direction will be continued to reduce unnecessary administrative regulations, spark market motivation and its intrinsic vitality, and to cultivate commercial credit. Under the condition of respecting market principles, vigorous efforts will be made to boost various kinds of institutional investors in order to promote the diversification of the domestic financial market, products, investors and intermediaries. The concept of standardized development will be maintained to strengthen market restraint and the risk-sharing mechanism and further boost the transparency of market operations. At the same time, measures will be taken to promote the establishment of a sound framework of laws, financial regulations and oversight, as well as the adoption of sound financial and taxation policies.

2.To push forward reforms of the stock issuance registration system.

Based on full information disclosure, measures will be taken to reduce the administrative examinations and approval process for the qualification of share issuers. Measures will also be taken to strengthen the flexibility of the stock issuance system to reduce costs and increase financing efficiency. Efforts will be made to strengthen ongoing-event and post-event oversight and improve the current civilian and criminal accountability system to effectively check fraud in the listing process. Further improvements will be made to the current exit system for listed companies to raise the quality of listed corporations through the elimination of those that are not qualified. There will be crackdowns on malpractices, such as false statements, market rigging and insider dealings, and stronger market restraints and credit restraints on listed companies and intermediary agencies to protect the legitimate rights and interests of investors and to ensure the openness, equity and justice that the stock market desperately needs.

3.To push for multi-channel equity financing.

While continuously improving various stock exchange bourses, continuous efforts will be made to push for the construction of a multi-bourse equity market. Under a unified institutional framework, all provinces, municipalities and autonomous regions will be able to set up equity markets that are suitable for the local economic development conditions. Measures will be taken to guide private equity investment and venture capital investment to support the equity financing of innovative and growth enterprises. At the same time, differentiated institutional arrangements and a unified registration platform will be set up to push for the formation of an organic equity market system.

4. To develop and standardize the bond market.

Measures will be taken to steadily expand the scale of the domestic bond market, push for the innovation and diversification of financial products and increase the securitization of assets. Explorations will also be made into municipal bonds to improve the financing mechanism for urbanization. At the same time, measures will be taken to develop collective bonds, private bonds and other financing tools to expand enterprises' financing channels and increase the financial support to the real economy.

5. To improve economic compensation mechanism and set up a catastrophe insurance system.

Measures will be taken to push forward the legislation for catastrophe insurance, define the range of catastrophe insurance and set up a government-driven, market-operated and risk-sharing, multi-layer catastrophe insurance system. Government and market roles will be defined to encourage the involvement of commercial insurers in major-disaster insurance.

6. To encourage financial innovation and enrich the financial market strata and products.

An innovation-driven development strategy will be adopted to steadily push forward innovation of the domestic financial market mechanism. There needs to be a long-term innovation mechanism for its organization, products and services. At the same time, risk-prevention measures will be put in place from the very beginning to balance innovation, development and risks and prevent innovations that aim to evade financial oversight and deviate from meeting the demands of the real economy.

7. To strengthen construction of financial infrastructure and ensure safe and efficient operation and stability of the domestic financial market.

Active and prudent measures will be taken to implement the principles of relevant international organizations and strengthen the construction of China's financial infrastructure. Efforts will be made to push forward the building of a trade information reporting system and other facilities to improve systems for the registration of financial products, trusteeship, trading, clearing and settlement. Efforts will also be made to promote more efficient information processing and transmission among these systems and supervisory organs.