Opinions of the CSRC on Supporting Shenzhen Capital Market Reform and Innovation
To carry out the guiding principles of the 3rd Plenary Session of the 18th CPC Central Committee and the country’s strategic deployment regarding Shenzhen-Hong Kong Modern Service Industry Cooperation Zone in Qianhai (hereinafter referred to as Qianhai), China Securities Regulatory Commission (CSRC) provides support for the reform and innovation of Shenzhen capital market; and for accelerating early and pilot implementation of financial policies in Qianhai. Official reply to the matter from the CSRC is as follows:
1. Support the opening-up and innovation of Qianhai capital market. The financial support policies practiced in Shanghai Free Trade Zone can be experimented and implemented according to corresponding procedures.
2. Explore and formulate plans to promote the establishment of a specialized hierarchy on the growth enterprise market (GEM) of Shenzhen Stock Exchange. Under the hierarchy, unprofitable internet and technological innovation-oriented enterprises, as long as they meet certain conditions, are permitted to go public on the GEM 12 full months after being listed in the National Equities Exchange and Quotations (NEEQ). The move is to support the benign development of GEM.
3. Strengthen exchanges and cooperation between Shenzhen and Hongkong capital markets. In line with principles of mutual benefit and win-win situation, Shenzhen and Hongkong Stock Exchanges can seek new forms of cooperation in the future based on experiences accumulated from the Shanghai-Hongkong Stock Connect program.
4. In principle, investment and financing platforms for privately enlisted products, whose initiation is led by securities & futures exchanges approved by the State Council, can be set up in Qianhai.
5. It is recommended that China Securities Depository & Clearing Co., Ltd coordinate and cooperate with Shenzhen Stock Exchange on researching and demonstrating concrete proposals about providing services for the mutual recognition of funds from mainland China and Hongkong SAR.
6. The overseas parent companies or holding subsidiaries of Qianhai-based companies can issue bonds in RMB on domestic market. There will be no restrictions on the use of raised funds within the country and beyond its borders.
7. Support Shenzhen securities & futures operating organizations in their active participation and expansion of securities & futures business intended for both mainland China and Hongkong SAR so as to further expand the scope of opening up.
8. There are plans to allow eligible subsidiary fund companies to use the funds raised at home for purposes of portfolio investment overseas. The plans are to be implemented after being approved by the State Council, and procedures for modifying and releasing related regulations are performed.
9. On the principles of “management by license, overlapping business operations, rule unification, and functional supervision”, eligible capitals in various forms can be used to establish securities & futures operating organizations in Qianhai and conduct financial business innovation. The CSRC will further deliberate on the issue as regards widening the scope of investment for subsidiary fund companies.
10. China Securities Finance Co., Ltd and China Securities Depository & Clearing Co., Ltd are permitted to establish subsidiaries in Qianhai according to laws and regulations.
11. According to relevant commitment under Closer Economic Partnership Arrangement (CEPA), active work is scheduled to motivate Hong kong-invested organizations to establish licensed joint-stock securities companies and joint-stock fund management companies based on regulations.
12. Support securities & futures operating organizations in independently conducting business innovation by operation of law in Qianhai. In line with the idea of streamlining administration and delegating power to the lower levels, approval processes will be simplified, and proactive attempts will be made to explore ways of administering the Negative List.
13. Formulate and modify rules about the establishment of securities & futures operating organizations and their license management. Encourage Qianhai-based securities & futures operating organizations to be active participants of foreign exchange and other financial product business. Professional securities companies can be founded in Qianhai to develop sale-by-proxy, brokerage, and other services of privately enlisted products.
14. Support the exploratory efforts of central government financial regulation bodies and local government to establish closer supervision cooperation mechanisms in Qianhai.
15. The department of science and innovation will take the lead and form a coordination group with relevant departments and system units, with the purpose of promoting the implementation of relevant policies jointly with Shenzhen Municipal People’s Government.