Watchdog ready to take a bite
( 2003-12-13 00:10) (China Daily)
The China Securities Regulatory Commission's (CSRC) latest efforts to get its house in order, though overdue, are crucial to the revival of the country's battered stock market.
On Thursday, the securities watchdog issued a new regulation governing its approval committee's work on endorsing stock issues and listing applications.
The new rule is laudable for allowing greater public scrutiny of the powerful committee.
Higher levels of transparency will increase the committee's accountability to prevent disqualified companies from being listed on the domestic stock market.
Besides the controversy linked to the sale of State shares, the poor performance of listed companies as a whole has dealt a heavy blow to shareholders' confidence over the past few years, causing a serious retrogression to the decade-old stock market.
As the watchdog of this immature market, the CSRC has an inescapable duty to bring to an end the grim reality that most listed companies hold: The market is only a source of cheap funds.
To fulfill its promise to protect the rights of investors, the securities authorities must do everything they can to minimize listed companies' chances to violate shareholders' interests.
Admittedly, the CSRC has done a lot in this regard. The commission has had a few firms delisted from the stock market in recent years to warn others looking to slip under the radar. It issued a series of regulations to highlight securities brokerage firms' accountability in underwriting new shares. And it also raised the criterion for companies' initial public offers.
Although the watchdog has contributed to the strengthening of supervision over listed or yet-to-be-listed companies, one of the root causes that has crippled the domestic stock market remains unaddressed -- none has been taken responsible for having given disqualified enterprises the green light to be listed in the stock market.
By inviting more public scrutiny of its work and the performance of its members, the new rule demonstrates an unprecedented resolution to put the development of the stock market back on track.
It is believed that as the CSRC moves to bolster itself, enterprises will find that they need to show more loyalty to investors when floating or face the watchdog's bigger bite.
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