Haitong Securities: Deeply Cultivate the "Experimental Field" of Financial Reform and Build a "New Highland" of Free Trade Pilot Zones

On September 29, 2023, the China Pilot Free Trade Zone will celebrate its 10th anniversary of operation.

The Shanghai Pilot Free Trade Zone is the first major reform task entrusted to Shanghai by the Party Central Committee after the 18th National Congress of the Communist Party of China. By entrusting Shanghai with the task of leading by example, it not only reflects trust in Shanghai but also injects new impetus into its reform and development. Over the past 10 years, the Shanghai Pilot Free Trade Zone has boldly experimented, ventured, and innovated independently, which has not only tested the national system and explored new paths, but also effectively promoted Shanghai's high-quality development. It has formed a number of replicable and promotable experiences and practices for further promoting China's reform and opening up.

The faint light turns into a torch, willing to be its radiance.

As a large financial state-owned enterprise rooted in Shanghai, the establishment of the Shanghai Pilot Free Trade Zone has been a decade since Haitong Securities entered a period of "growth". The free trade zone has provided a platform for Haitong Securities to continuously innovate and develop its business, and has also created opportunities for the company to explore and expand its cross-border business.

Establishing a Free Trade Pilot Division Company

Engage in financial innovation by bowing to the market

The horn of the era of free trade zones is blowing, and Haitong Securities is striving to take the lead.

In December 2013, Haitong Securities quickly established a business preparation group for the Free Trade Zone. After several discussions and referring to interbank experience, it was decided to establish the Shanghai Free Trade Zone Pilot Division Company to carry out cross-border business in the Free Trade Zone.

At that time, Haitong Securities was one of the earliest securities institutions to settle in the Shanghai Pilot Free Trade Zone, representing the company's determination and confidence to actively participate in and serve the construction and development of the pilot free trade zone.

The separate accounting unit of the free trade zone is a system for monitoring cross-border capital flows, a tool for adjusting capital flow thresholds, and a carrier for pioneering the opening of the capital market. In August 2015, Haitong Securities' FTU account system successfully passed the system acceptance and 33 sets of business system acceptance by the People's Bank of China expert group, becoming one of the first securities companies to connect to the FTU account system. This not only reflects Haitong Securities' innovative ability, but also provides conditions for conducting cross-border business in the free trade pilot zone.

Over the past 10 years, the Shanghai Pilot Free Trade Zone has played a leading role in financial reform and opening up, serving as a pioneer in reform and an experimental field for innovation in the financial sector.

In November 2021, Haitong Securities successfully sponsored Shengmei Semiconductor Equipment Co., Ltd., a leading semiconductor equipment company, to land on the Science and Technology Innovation Board.

In February 2015, the Shanghai headquarters of the People's Bank of China issued the "Implementation Rules for Macro Prudent Management of Overseas Financing and Cross border Fund Flows in China's Pilot Free Trade Differential Accounting Business". According to regulations, funds borrowed from overseas by enterprises and non bank financial institutions in the region through free trade accounts should be used in accordance with relevant regulations of free trade accounts, for their own production and business activities, as well as for the construction of projects in the region and overseas, and in accordance with the macroeconomic regulation direction of the national and experimental zone industries.

Haitong Securities entered the market and set an example.

In September 2014, the Shanghai Gold Exchange International Board was officially launched. Relying on the unique free trade account system of the Shanghai Pilot Free Trade Zone, it has become an important window for China's gold market to open up to the outside world and an important channel for foreign investors to invest in the Chinese gold market.

It is worth mentioning that at the beginning of its establishment, Haitong Securities Free Trade Division Company began to promote the preparation of the Gold International Board as an important task. In May 2016, the company received a membership notice from the Shanghai Gold Exchange and became one of the earlier A-class international members of the Shanghai Gold Exchange; The first gold international board leasing business was completed in May 2018. The company strictly follows the various institutional rules of the Shanghai Gold Exchange, ensuring that business operations are legal and compliant, risks are controllable, stable and orderly, and supporting the construction of financial markets in free trade zones such as the Gold International Board with practical actions.

Equity financing of enterprises within the service area

Suggestions for Financial Reform in Free Trade Zones

Focusing on the funding needs for the development of high-tech enterprises, Haitong Securities fully focuses on corporate financing issues and promotes the high-quality development of strategic emerging industries.

According to statistics, since 2013, Haitong Securities has completed a total of 18 IPO and refinancing projects in the Shanghai Pilot Free Trade Zone, including 11 IPO projects and 7 refinancing projects. Three IPO projects under review, including one integrated circuit enterprise and two biopharmaceutical enterprises; There are also 20 project reserve projects, including 18 IPO projects and 2 refinancing projects. Among the completed IPO projects, there are excellent enterprises such as integrated circuits, biopharmaceuticals, software, etc. For example, Shengmei Shanghai is a spin off subsidiary of a US listed company in China, listed on the A-share market, and the first domestic enterprise to submit application documents and pass the Shanghai Stock Exchange review on the Science and Technology Innovation Board; Aojie Technology is the first A-share company and one of the few companies in the world with full standard cellular baseband technology and multi protocol non cellular IoT chip research and design capabilities; The successful issuance of projects such as Junshi Biotechnology and Maiwei Biotechnology also demonstrates the advantages of Haitong Securities in the field of biomedicine.

In addition, Haitong Securities assisted free trade zone enterprises Shanghai Yibang Pharmaceutical Information Technology Co., Ltd. and Shanghai Baijin Chemical Group Co., Ltd. in successfully listing on the national stock transfer system in 2022.

Both participants and advocates.

As the vice chairman unit of the Cross border Financial Services Professional Committee of the Shanghai Financial Society, under the guidance of regulatory departments such as the Shanghai headquarters of the People's Bank of China, the local financial supervision bureau of the city, the Shanghai Securities Regulatory Bureau, and the Shanghai Branch of the State Administration of Foreign Exchange, Haitong Securities conscientiously fulfills its responsibilities and actively participates in the financial reform surrounding the Shanghai Pilot Free Trade Zone and the Lingang New Area, the construction of the Shanghai International Financial Center, cross-border taxation, foreign-related laws, cross-border securities investment pilot projects, and RMB offshore trading. Combining with its own business practice, Haitong Securities actively participates in the investigation, research, formulation, and practice of financial innovation policies in the pilot free trade zone.

Give full play to the advantage of "trial and error"

Innovation Free Trade Zone Offshore Bonds

The report of the 20th National Congress of the Communist Party of China pointed out that we must adhere to the direction of socialist market economy reform, adhere to high-level opening up to the outside world, and accelerate the construction of a new development pattern with domestic circulation as the main body and domestic and international dual circulation promoting each other. Exploring the development of offshore RMB trading in the Shanghai Pilot Free Trade Zone is a beneficial practice to implement the central support for Pudong to build a leading area for socialist modernization construction, and it is also an important task for Shanghai to build an international financial center.

Haitong Securities continues to explore and innovate the offshore bond business in the free trade zone, fully leveraging the advantages of the financial market in the free trade zone as a "first mover and first mover", and continuously exploring ways to assist in the continuous improvement of the functional mechanism of free trade bonds, the continuous expansion of the bond market entities in the free trade zone, and promoting the convergence of new areas with the international market in terms of rules and institutional construction. As of now, the company's domestic and international cooperation has assisted enterprises in issuing 35 offshore bonds in the free trade zone, with a total financing scale of RMB 35.548 billion and fruitful financial innovation achievements——

In May 2021, the company assisted Shanghai Real Estate Group in successfully issuing the first phase of Shanghai Free Trade Zone offshore RMB bonds, with a financing amount of 3 billion yuan, which was the largest single fundraising scale of the free trade zone offshore RMB bonds at that time;

In October 2022, the company assisted Lingang Group in successfully issuing the world's first green dual currency "Pearl Bond", which was listed on the Singapore Stock Exchange and the Macau Stock Exchange, with a financing amount of 1 billion yuan and 50 million euros. The proportion of foreign investors reached a historic high;

In December 2022, the company assisted Bank of Communications Financial Leasing in successfully issuing the country's first ESG Free Trade Zone RMB bond, with a financing amount of 2.4 billion yuan, achieving three major "innovations": the first financial institution free trade zone bond, the first introduction of green and sustainable linkage concepts, and the first financial institution free trade zone bond listed on both markets;

In April 2023, the company assisted AVIC International Financial Leasing Co., Ltd. in successfully issuing the country's first offshore bond of a state-owned enterprise financial leasing company's green free trade zone, with a financing amount of 1.1 billion yuan; During the same period, Haitong Securities successfully issued the country's first offshore bond from the Shanghai Free Trade Zone, with a financing amount of 4 billion yuan.

With multiple innovative achievements that are innovative, benchmark, and referenceable, Haitong Securities' "Shanghai Accelerates the Innovation of Offshore Bond Business in Shanghai Free Trade Zone" has been selected as the 11th batch of financial innovation cases in Shanghai Free Trade Zone.

Support the construction of the new Lingang area

Injecting financial vitality into high-quality development

In August 2019, Shanghai established the only new pilot free trade zone in China in the Lingang area.

The establishment of the Lingang New Area is a major strategic deployment made by the Central Committee of the Communist Party of China to further expand opening up, benchmarking against the internationally recognized most competitive free trade zone, creating a special economic functional zone with more international market influence and competitiveness, actively serving and integrating into national major strategies, and better serving the overall strategic layout of opening up to the outside world.

Haitong Securities actively fulfills its responsibilities as a municipal financial enterprise, deeply implements the requirements of Shanghai's strengthening of the "four functions" and deepening the construction of the "five centers", relies on the system and industrial advantages of the Lingang New Area, and through the company's "investment, financing, protection, research" and wealth management business linkage, helps to promote the economic and social development of the Lingang New Area. Multiple companies providing IPO and refinancing services have settled in Lingang for development, such as SMIC, Shanghai Silicon Industry, Junshi Biotechnology, etc., involving key industries such as integrated circuits, biopharmaceuticals, software services, and automotive manufacturing.

In April 2023, Haitong Securities signed a strategic cooperation agreement with the Lingang New Area Management Committee.

On the basis of the early stage, Haitong Securities will continue to deeply participate in the construction of the Lingang New Area, relocate to the Shanghai Pilot Free Trade Zone, establish the Shanghai Lingang Branch, and establish the Lingang Haitong Revitalization Fund to serve scientific and technological innovation enterprises. We have signed a strategic cooperation agreement with Lingang Group, and the two sides will carry out long-term cooperation in serving the implementation of national strategies, promoting the development of industrial clusters in the area, cultivating key park enterprises, assisting in the construction of high-quality cities, improving two-way communication and cooperation mechanisms, and promoting party building and talent exchange. We have released the "Several Measures for Haitong Securities to Serve the Lingang New Area", which aims to inject financial vitality and contribute Haitong's strength to the high-quality development of the new area in three directions: "serving the national strategy, building the Lingang area", "promoting financial openness and innovative development, enhancing the depth of cooperation between physical enterprises", and "coordinating financial ecological resources to assist in the construction of high-quality cities".

Currently, Shanghai is taking the implementation of the strategy of upgrading the free trade pilot zone as an opportunity to strengthen proactive planning and systematic design, carry out greater pressure testing, solve problems for expanding high-level opening up, explore ways for building a new development pattern, and empower the promotion of high-quality development.

Standing at a new starting point, Haitong Securities will always adhere to its original mission, strengthen its sense of responsibility, devote itself wholeheartedly to the innovation of financial services in the Shanghai Pilot Free Trade Zone, and fully contribute the "Haitong Power" to the construction of the Shanghai International Financial Center.