Expert: Strengthening cross-border supervision is a prerequisite for financial opening up
Our reporter Liu Qi
With the gradual deepening of my country's financial market opening to the outside world, many domestic companies choose to go overseas for listing. At the 2020 System Mid-year Work Conference and Warning Education Conference held on July 30, the China Securities Regulatory Commission emphasized that it is necessary to strengthen cross-border supervision cooperation, take practical measures to deal with the situation of China's concept stocks, and promote the construction of relevant regulatory systems to jointly combat Cross-border securities illegal and criminal acts.
In response to the current challenges faced by cross-border supervision in the financial sector, Pan Helin, executive dean of the Institute of Digital Economy, Zhongnan University of Economics and Law, said in an interview with a reporter from Securities Daily that, first of all, the maturity of financial markets in different countries is different, and the relevant regulations and systems are different. There are also certain differences. Secondly, taking cross-border payment and settlement as an example, there may be regulatory arbitrage, which is also a challenge to the effectiveness of regulation. The third is that international relations are now unpredictable, and frictions between countries may lead to a lack of stable and long-term cooperation between regulatory agencies.
In recent years, the China Securities Regulatory Commission has been actively exploring and reforming the enforcement system and mechanism of cross-border supervision and coordination. According to the list of memorandums signed between the China Securities Regulatory Commission and overseas securities (futures) regulatory agencies published on the official website of the China Securities Regulatory Commission, as of December 2019, the China Securities Regulatory Commission has established cross-border supervision and enforcement with securities and futures regulatory agencies in 64 countries and regions. Cooperation mechanism. In addition, the China Securities Regulatory Commission signed the International Securities Regulatory Commission’s Multilateral Memorandum of Understanding on Consultation, Cooperation and Information Exchange in May 2007, and began to carry out cross-border regulatory enforcement cooperation with overseas regulatory agencies under the framework of bilateral and multilateral regulatory cooperation.
In practice, the China Securities Regulatory Commission has also continuously intensified its inspections of illegal and criminal acts in cross-border securities. Among the 20 typical cases of violations of the securities regulatory inspections in 2019 announced by the China Securities Regulatory Commission in May this year, many involved cross-border supervision.
For example, the "Infront Micro-Financial Falsification Case", according to a report from the China Securities Regulatory Commission, shows that this case is a typical case of a listed company using overseas business to implement financial fraud. Infront Microelectronics Co., Ltd. (abbreviated as Infront Micro), under the name of conducting data center business overseas, recognized revenue when it did not meet the conditions for business development and could not provide contractual services, and inflated its 2015 profit by more than 23 million yuan. The China Securities Regulatory Commission stated that it will continue to strengthen cross-border supervision cooperation, severely crack down on the use of overseas business to cover up financial fraud and evade supervision and investigation, and strengthen the seriousness of information disclosure.
Another reported case of "market manipulation by Lu Le and others" is a typical case of private equity fund managers using Shanghai-Hong Kong Stock Connect accounts to manipulate the market across borders. From December 2015 to July 2016, private equity fund manager Lu Le and others used asset management accounts and Shanghai-Hong Kong Stock Connect accounts to manipulate 3 stocks including "FeiDa Environmental Protection" cross-border, making a total profit of more than 15 million yuan.
The China Securities Regulatory Commission stated that it will strengthen law enforcement cooperation with overseas regulatory agencies, resolutely crack down on illegal acts such as cross-border market manipulation, and promote the smooth operation of interconnected market mechanisms. The CSRC will fully implement the “zero tolerance” requirement of the State Council’s Financial Committee on illegal and criminal activities in the capital market, continue to strengthen close collaboration with domestic and foreign regulatory and law enforcement agencies, and resolutely maintain a fair and just market order and a healthy market ecology under the rule of law.
In Pan Helin's view, further opening of the financial market is an important aspect of my country's opening to the outside world, and strengthening cross-border supervision is a prerequisite for financial opening to the outside world. Only when the regulatory system is in line with international standards and a benign cross-border regulatory cooperation is formed, can institutional barriers be eliminated and further opening up. The financial opening to the outside world also puts forward higher requirements for cross-border supervision. The further opening of the financial market means that cooperation with international capital and cross-border capital flows will become more frequent. In order to better monitor cross-border financial activities, it is necessary to strengthen cross-border supervision. (Securities Daily)