China's top securities regulators pledged to widen financing channels for the country's more than 100 securities houses and encourage their innovation.
But the companies have also been urged to strengthen management and risk control to build up their credibility.
The combination of a better exterior environment and sounder inner control is the key to help securities businesses out of adversity and help them survive in market competition.
The message was conveyed by Shang Fulin, chairman of the China Securities Regulatory Commission (CSRC), when addressing a national conference for securities companies that ended yesterday in Beijing.
Shang set the tone for the future development of the securities companies as ''promoting standard operations and business development according to the standards of modern financial enterprises.''
He said domestic securities companies are facing a series of challenges, such as mounting international competition, poor inner control and risk prevention as well as moral hazards.
They are obliged to do a better job in credit construction, innovation and the redesigning of marketing strategies, which would help them find new profit sources.
Shang said CSRC would also try to adjust its regulatory policy according to the new environment -- ensuring the protection of the lawful rights of investors while giving securities companies more lenient policies in financing and business expansion.
Qualified securities firms will be allowed to issue bonds and more will be able to list stocks in the future. They can also expand shares and conduct mergers and takeovers to grow stronger and bigger.
Wider financing channels have been hard to come by among securities businesses, which has only seen two of them listed while acquiring loans from banks has been hard.
They also face shrinking profits as the stock market has under performed over the past two years.
Shang's remarks will soothe their pressure to some extent, but experts said it is not rational to simply rely on policy boosts.
To maintain a foothold in global competition, securities companies are also being urged to change and seek new and feasible marketing strategies and come up with new incentives and disciplinary systems.
To avoid the irregularities that have eroded the industry's image and market sentiment in the past, these companies are asked to behave themselves via strict standards.
Li Xiaoxue, assistant chairman of CSRC, said securities companies are prohibited to misuse their clients' settlement funds, entrusted assets and bonds. They are also to strengthen the management of trading branches with an efficient inner control system.
Also in the pipeline is a new sponsor system for companies seeking a public listing. The system, already practiced overseas for a long time, would require the listing applicants to find sponsors and will put investment banks in a market-driven competition, where only good reputation and creditability would win more clients.
(China Daily August 14, 2003)
