The Positive Supervision And Passive Supervision Of The Securities Markets

The System of Securities Supervision, I think, includes three parts: the positive supervision, the passive supervision, and securities arbitration. The classification between the positive supervision and the passive supervision is based on the difference of the procedure, duty, role and supervisor's legal position between the former and the latter.The passive supervision refers the judicial authorities or the quasi-judicial authorities supervise the securities market through holding the securities cases and making the decisions upon some party's application. The decisions on securities may become case law in common law, or be considered as important factors during the Securities Supervision or the procedure of making administrative legislation in civil law, on this point, so the passive supervision is indirect and universal supervision on the securities market. In addition, the passive supervision is also indispensable in the whole Securities Supervision system.The positive supervision refers the supervision agency, including the government agency and the self-discipline institute, which is authorized by the law and rules, actively supervises the securities market upon the law, rules, or the industry charter. The supervision authority is originated from the statute law and rules. The supervision agency's legal status, powers and legal functions are all clearly defined in most countries' law, therefore actively supervising the securities market is the legal duty of the supervision agency, otherwise failing in its duty. There are many differences in way of supervision, procedure, functions, etc. between the passive and the positive supervision. However, most of all, the difference in character lies in two different courses: the passive supervision is the course of the judicial authorities or the quasi-judicial authorities performing the judicial authority; while the positive supervision is the course of the supervision agency performing the administrative authority.Securities Arbitration is the supplementation to the passive supervision, and also the necessary composition of the System of Securities Supervision.The author finds the history developing rule of securities markets in different countries are similar, namely that with the development of securities market, the passive supervision is exposed more and more limitations, unable to effectively supervise the securities market, which lead to the rise of positive supervision. That is to say, the birth of positive supervision is the result of the deeply development of securities market. The positive supervision has been performing great functions in most countries' securities markets, which is determined by the law of development of the securities market itself. However, with more deeply development of securities market, people are ware of that, the supervision on securities market is heavily reliant on the judicial intervention, and the mode with only positive supervision has deficiencies itself, increased interaction between the two supervision modes will improve the supervision efficiency in securities market, and promote it to develop healthily.Nevertheless, because of the special history background, there has been only positive supervision on securities market, with primary deficiency in supervision system's structure. With the development of the securities market, it proves that the positive supervision is not enough to solve some problems happened on securities market, such as stockholder's derivative suit. Accordingly, the two modes of supervisions are both needed in our securities market, just as other countries' securities market, where nothing but increasing the coordination between the two modes of supervisions can improve the efficiency on supervision of securities market. It proved to be true from the internal and international experiences of Securities Supervision, and it is also a tendency all over the world.