An efficient and rules-based secondary market is also important for the function of the primary market. The improvement of the efficiency and liquidity in the secondary market is beneficial for the corporate financing and valuations in the primary market, thus promoting the development of the real economy.
The development of an efficient financial market also relies on a stable and orderly market environment, which requires a sound information communication channel to ensure market forces play a major role. This has become the consensus of scholars and industry experts. The illegal activities in the securities market have jeopardized fair market competition, harmed the normal and stable operation of the market, and undermined investors' interests and confidence.
Building a rules-based and transparent capital market requires market players to obey rules and regulations and disclose information in a timely manner. It also requires the regulators to act swiftly to crack down on illegal activities.
Therefore, the adoption of the revised Securities Law will further energize the market, help boost investors' confidence and allow the financial market to play a more effective role. A healthy and orderly financial market will better support economic development, better meet the financing demand of companies and promote sustainable economic growth.
The introduction of the revised Securities Law holds far-reaching significance as it will help draw more investors from home and abroad into the Chinese capital market. Global economic growth has been sluggish amid growing challenges and uncertainties. Investors' sentiment has been depressed.
Against such a backdrop, China has been firmly pushing capital market reforms, aiming to build a standardized, transparent, open, and dynamic capital market. As Chinese A shares and sovereign bonds are increasingly being included in major global indexes such as the MSCI and FTSE, the Chinese market has drawn growing attention from international investors.
The adoption of the revised Securities Law is a major step in China's capital market reform and it will help boost the market's attractiveness to foreign investors, improve their confidence and maintain a stable and orderly market environment.
On the other hand, the introduction of the new Securities Law also helps to better regulate the behavior of institutional investors. As an important part of the securities market, institutional investors can help stabilize the market and put checks on listed companies.
The provisions of the new Securities Law, such as strengthened regulation on information disclosure and higher penalty for fraudulent securities issuance, will expand the positive influence of institutional investors in both the primary and secondary markets.
The revised law will enable them to better screen and verify the quality of the unlisted companies in the primary market and the behavior of the listed companies in the secondary market, therefore forming an effective linkage between the two markets and eventually helping improve the quality of the Chinese listed companies.
The author is vice-dean of the School of International Trade and Economics at the University of International Business and Economics in Beijing.
