What signal is being released?, The three major A-share indexes opened high and rose by over 5%! The China Securities Regulatory Commission has issued consecutive documents

Affected by intensive favorable policies, all three major A-share indexes opened high on the 28th: the Shanghai Composite Index closed at 3219.04, up 5.06%; The Shenzhen Component Index closed at 10714.69, up 5.77%; The Shanghai and Shenzhen 300 closed at 3911.55, up 5.46%.

On August 27th, the Ministry of Finance and the State Administration of Taxation announced a halving of stamp duty from August 28th. The China Securities Regulatory Commission has launched multiple policy combinations, including regulating stock reduction behavior, lowering financing margin ratio, optimizing IPO, and refinancing regulatory arrangements.

The China Securities Regulatory Commission (CSRC) stated that it has fully considered market concerns, carefully studied and evaluated the share reduction system, and now further regulates the reduction behavior of relevant parties. The following requirements are made: if a listed company has a situation of breaking through the stock market or breaking through the net asset value, or has not received cash dividends in the past three years, and the cumulative cash dividend amount is less than 30% of the average annual net profit in the past three years, the controlling shareholder or actual controller shall not reduce their shares of the company through the secondary market. The concerted action of the controlling shareholder and actual controller shall be carried out in accordance with the above requirements; If a listed company discloses that it has no controlling shareholder or actual controller, the first largest shareholder and its actual controller shall comply with the above requirements.

At the same time, strict control should be exercised over the total amount of reduction in holdings by shareholders of other listed companies, guiding them to arrange the reduction pace reasonably according to market conditions; Encourage controlling shareholders, actual controllers, and other shareholders to promise not to reduce their holdings or extend the share lock up period.

The China Securities Regulatory Commission is urgently revising the Several Provisions on the Reduction of Shares by Shareholders, Directors, Supervisors and Senior Officials of Listed Companies, enhancing the effectiveness of the rules, refining relevant liability clauses, and increasing the crackdown on illegal reduction of shares.

On the same day, in order to implement the package of policy arrangements recently released by the China Securities Regulatory Commission to activate the capital market and boost investor confidence, promote the functions of margin trading and securities lending, and better meet the reasonable trading needs of investors, with the approval of the China Securities Regulatory Commission, the Shanghai Stock Exchange, Shenzhen Stock Exchange, and Beijing Stock Exchange issued notices to revise the "Implementation Rules for Margin Trading", reducing the minimum margin ratio for investors to purchase securities through margin trading from 100% to 80%. This adjustment will be implemented after the market closes on September 8, 2023.

In recent years, the margin trading and short selling business has been operating steadily, the trading mechanism has been continuously optimized, the compliance and risk control level of securities companies has been continuously improved, and investors' rational trading and risk prevention awareness have significantly increased. As of August 24, 2023, the balance of on exchange margin trading and securities lending was RMB 1567.8 billion, with a relatively high margin ratio and controllable overall business risks. On the basis of overall controllable leverage risk, moderately relaxing the financing margin ratio is conducive to promoting the function of margin trading and securities lending business, and activating existing funds.

This adjustment applies to both new opening contracts and existing contracts, and investors do not need to purchase balance contracts to apply the new margin ratio. Securities companies can comprehensively evaluate the credit and performance of different customers, and reasonably determine the proportion of financing margin for customers. Investors should continue to adhere to a rational investment philosophy, use margin trading and securities lending tools reasonably based on their own risk tolerance. The China Securities Regulatory Commission will urge securities companies to effectively strengthen risk management, provide good investor services, and protect the legitimate rights and interests of investors.

In balancing the primary and secondary markets, the China Securities Regulatory Commission stated that it fully considers the current market situation, improves the countercyclical adjustment mechanism of the primary and secondary markets, and makes the following arrangements around a reasonable grasp of the pace of IPO and refinancing:

1、 Based on recent market conditions, the pace of IPO will be gradually tightened to promote dynamic balance between investment and financing.

2、 For large-scale refinancing of listed companies in the financial industry or other industries with large market capitalization, implement a pre communication mechanism, pay attention to the necessity of financing and the timing of issuance.

3、 Emphasis should be placed on supporting the advantages and limiting the disadvantages. For listed companies that have experienced breakdowns, net losses, sustained losses in operating performance, and a high proportion of financial investments, appropriate restrictions should be placed on their financing intervals and scale.

4、 Guide listed companies to reasonably determine the scale of refinancing and strictly implement the requirements for financing intervals. The review will focus on whether the funds raised in the previous round have been basically used up and whether the projects raised in the previous round have achieved the expected benefits.

5、 Strictly require listed companies to invest their raised funds in their main business and strictly limit diversified investments.

6、 The refinancing of real estate listed companies is not subject to restrictions on breakdowns, net losses, or losses.

Media comments

The three-dimensional and incremental policy of trading side reform is worth looking forward to

Starting from August 28th, the stamp duty on securities trading will be halved, and the Shanghai, Shenzhen, and North Stock Exchanges will reduce securities trading handling fees. Several securities companies will also lower commission rates. In addition, the proportion of financing margin is about to be lowered, and the financing and securities lending rates are also expected to be lowered. This indicates that the policy deployment of revitalizing the capital market and boosting investor confidence is being intensified.

Experts believe that in order to activate the market and boost confidence, reforms on the investment side, financing side, and trading side are working together. Among them, the reform of the trading side focuses on reducing transaction costs while also considering improving systems and optimizing supervision. It is expected that more measures will be studied and introduced to vigorously stimulate market vitality and continuously enhance market attractiveness.

Information images. Shen Jizhong

Reduce transaction costs

Last weekend, multiple securities companies carried out internal debugging to ensure that the measures of reducing securities trading fees and synchronously lowering commission rates, starting from August 28th, were implemented in a timely manner.

Reducing fees and benefits, as well as lowering transaction costs, are important aspects of transaction side reform. The China Securities Regulatory Commission previously introduced that it will reduce securities trading fees and simultaneously lower commission rates for securities companies. On August 24th, Guotai Junan Securities announced in the "Notice Letter on Lowering Trading Fees for Certain Securities Varieties" that it plans to effectively transmit the policy effects of the China Securities Regulatory Commission to investors by lowering customer account commission rates and adjusting transaction fee parameters.

"With a focus on revitalizing the capital market and boosting investor confidence, the reform of the trading side of the capital market has begun," said Tian Lihui, Dean of the Financial Development Research Institute of Nankai University.

According to Tian Liang, Chief Analyst of Financial Industry at CITIC Securities, in 2022, the stamp duty on securities transactions involving market investor costs was 275.9 billion yuan, securities trading commissions were 128.6 billion yuan, securities regulatory fees were about 9 billion yuan, handling fees were about 21.9 billion yuan, and transfer fees were 4.5 billion yuan. "The exchange's handling fee has been reduced by 30% this time, and based on the situation in 2022, it is estimated that it can save investors 6.57 billion yuan in investment costs annually." Tian Liang said.

"An efficient and active multi-level capital market is a comprehensive and systematic project," said Chen Ge, General Manager of Fuguo Fund. Reducing securities trading fees and synchronously lowering commission rates of securities companies is essentially giving benefits to investors, reducing market friction costs, enhancing investors' sense of gain, and enhancing the enthusiasm of market entities. For institutions, attracting more funds to enter the market will have the effect of "supplementing prices with quantity", which is beneficial for the sustainable development of institutions in the long run.

Improve systems and optimize supervision

Relevant departments collaborate to promote the optimization and improvement of trading systems and trading supervision, and form a combination of measures to reduce transaction costs, striving to achieve maximum policy efficiency.

On August 10th, the Shanghai and Shenzhen Stock Exchanges proposed to accelerate a series of practical measures in improving trading systems and optimizing trading supervision to better stimulate market vitality. It is mentioned that studying the introduction of post market fixed price trading mechanisms into ETFs.

Dong Dengxin, Director of the Institute of Financial Securities at Wuhan University of Science and Technology, analyzed that the introduction of a fixed price trading mechanism in ETFs after market hours can help improve investor trading convenience and market liquidity. Adding additional time for trading at fixed prices facilitates post market trading for investors who do not wish to continue trading or bear the risk of price fluctuations. It can also assist investors who are interested in conducting ETF bulk trading but have complex processes in conducting centralized trading after market hours, enriching convenient trading channels.

In addition, in terms of optimizing trading supervision, the exchange has stated that it will adhere to rule based supervision and precise supervision, balance maintaining smooth trading and cracking down on malicious speculation, focus on regulating abnormal trading behavior or suspected illegal and irregular behavior, prevent trading risks, adhere to regulatory bottom lines, and maintain stable market operation; Continuously promote the disclosure of regulatory standards, release English versions of trading regulatory business rules, strengthen rule promotion and investor education, further clarify market expectations, and enhance regulatory transparency.

More policies on the road

While promoting the dynamic balance of investment and financing, promoting the reform of the trading side has a positive effect on enhancing the activity of the capital market. Experts predict that the policy space for trading side reform is worth looking forward to, and more measures are on the way.

When talking about the key points of the next trading side reform, the relevant person in charge of the China Securities Regulatory Commission stated that they will study the appropriate extension of trading hours in the A-share market and exchange bond market to better meet investment trading needs; Further expand the scope of margin trading and securities lending targets, reduce margin trading and securities lending rates, and include ETFs in the scope of refinancing and securities lending targets; Optimize investment transaction supervision, study and optimize the application of regulatory requirements such as disclosure of large shareholding information, short-term trading, and reduction restrictions, and facilitate the investment operation and management of professional institutions.

Wang Bo, Deputy General Manager of the Shanghai Stock Exchange, introduced that the Shanghai Stock Exchange will reduce the requirements for the number of stock fund applications, further expand and optimize the stock market making mechanism, facilitate investor trading, and improve stock pricing efficiency and liquidity; Improve the market long short balance mechanism, research and expand the financing and securities lending targets, expand the sources of securities lending, and reduce related fees. In addition, further improve the construction of the derivative market, enrich the supply of derivative products, and fully leverage their risk management functions.

Regarding how to fill the gaps in the trading side in the future, Liu Jian, Chairman of Shenwan Hongyuan Securities, believes that the market maker system can be piloted and promoted from the Science and Technology Innovation Board to other markets. Through bilateral quotation services and supporting arrangements such as margin trading and securities lending, the market liquidity can be improved; Further exploration of the reform of the main board trading system can also be carried out, with a focus on enhancing the trading activity of blue chip stocks in the overall market, and moderate adjustments can be made to the price limit.

"Securities companies should focus on the needs of market trading entities, actively develop customer trading businesses such as market making and liquidity management, actively create various structured products, provide trading advice and market research services, and build a one-stop institutional sales and trading platform centered on institutional customers." Liu Jian said.