Study On Self-regulation Of Stock Exchanges With New Trends

Capital market is the engine of economic development. Stock exchange plays a keyrole in capital market. From the worldwide, self-regulation of stock exchanges hasundergone a vivid and flexural development, and aggregated lots of practicalexperience. In recent years, stock exchanges have presented trends in organizationcorporatization, trading electronicalization, and competition internationalization.These trends not only changed the mode of the exchange operation, but also presentedunexpected challenges to self-regulation of stock exchanges. As a result, a debate onthe boundary of self-regulation has been widely conducted. Since the1990s, Chinasecurities markets’ scale and the international status had seen a substantial change.Unfortunately, under such Chinese "booming" and "transform" circumstance, stockexchange self-regulation experienced serious dissimilation, and thus, affected itsoperational effectiveness and efficiency. Under the new market environment, how toperform the self-regulation function faces many changes, difficulties and challenges.From perspective of numerous disciplines, especially in law discipline, there is muchresearch works about the connotation, nature, function, and operation mechanism ofstock exchanges self-regulation. In addition, some attention has been paid to problems,reasons and countermeasures on our country’s self-regulation of stock exchanges. But,with respect to stock exchange’s new trends, there is a shortage of systematic and concentrated research; so does related theoretical study. In this context, this thesisinvestigates stock exchange self-regulation from the viewpoint of new trends of stockexchanges so as to systematically solve practical problems and discuss restrictionfactors. Under the trend of corporatization, electronicalization, internationalizationand specialization of stock exchanges, this study summarizes the experiences andlessons of foreign mature markets, analyses difficulties, contradictions and challenge,puts forward corresponding countermeasures and suggestions, in order to understandour present situation and draw the future direction.The full text consists of an introduction, five main chapters. The first chapter is anoverview of self-regulation of stock exchanges. The second to the fifth chapters relateand analyze from four points, namely the corporatization, electronicalization andinternationalization, specialization, respectively to discuss self-regulation stockexchanges. There are about200,000words in the full text.The first chapter is "Self-regulation of Stock Exchanges and It’s New Trends".Securities market regulation is a critical component of financial regulation. Comparedwith mature markets in the west, emerging stock markets have many differences fromthe range of government functions, to the degree of government intervention, to thefocus of regulatory objectives and philosophy. For emerging market, it is notemergent to explore how to reduce or remove regulations, but to establish theappropriate regulatory objectives, regulatory principles and scope of regulations aswell as to conduct the regulatory adjustments and improvements cautiously. Globalstock market supervising and managing mode can generally be divided into threetypes, namely government leading type, market self-regulation leading type andcomprehensive type. No matter what kind of mode it is, self-regulation of stockexchanges is very critical. Due to the historical background, market structure,operational environment, supervision pattern, the contents of self-regulation indifferent countries have varied from country to country, from ground to ground, andfrom time to time. Generally speaking, stock exchange self-regulation function mainly has three aspects: the first aspect is the regulation of listed companies, the second oneis the regulation of securities firms (members), and the third one is the stock marketsupervision, i.e., the market surveillance.A country’s securities legal system, structure of stock market, the regulatorydistribution, the organization and legal nature of stock exchanges, are closely relatedto the function of self-regulation of stock exchanges. At present, stock exchanges ofour country can be seen as public institutions from the perspective of functionalattributes. However, from the perspective of organizational form, it is not a clearanswer whether stock exchange is membership or corporate system. From theperspective of actual situation of history and operation, our country’s stock exchangesare far away from the traditional membership exchanges. Under the Chinese stylecircumstance, stock exchanges have characteristics of enterprises, institutions as wellas regulation of the subordinate body of government at the same time. This speciallegal nature also affected functions of stock exchanges’ self-regulation.The first chapter explains general theories of securities market regulation andregulatory characteristics of emerging stock markets, and summarizes major securitiessupervision modes and development trends in the world. Then the chapter analyzesvariations of characteristics under the peculiar market environment of China. Basedon the Shanghai Stock Exchange and Shenzhen Stock Exchanges, this chapterintroduces the current function content, organizational structure and regulatorymeasures of stock exchanges’ self-regulation.The second chapter is "Dilemma and Solution-Self-regulation of Stock Exchangeswith the Trend of Corporatization". Stock exchanges can be divided into companystock exchanges and membership stock exchanges. Traditional exchanges aremembership exchange mostly. But, since the1990s, more and more stock exchanges’organization structure has moved from membership to corporation. Company stockexchanges become a new style and trend. Corporatization reforming is not the goal of the global movement of stock exchangecorporatization reform. The main reason lies in the exchange competition and theadvantages of corporatization. Corporatization and establishing modern managementmechanism are strategic choices of stock exchanges in our country. Stock exchange’scorporatization will introduce a series of impact to self-regulation at the same time.The profit-driven nature and self-regulation requirements will have conflicts ofinterests. Many problems should to be discussed and solved, such as how to solve theconflicts of interest contradiction, which self-regulation mode should be chosen, howto allocate and exercise self-regulation function.The second chapter introduces the corporatization trend, the advantages ofcorporatization, and the transform of self-regulation after stock exchangecorporatization. This chapter discusses the theoretical explorations, practicalselections and examples on the ground of overseas stock exchanges’ self-regulation.This chapter also proposes some suggestions to our country’s stock exchangesconcerning corporatization’s steps and methods, self-regulation mode selection, aswell as arrangements of regulatory functions.The third chapter is "Opportunities and Challenges–Self-regulation of StockExchanges with the Trend of Electronicalization". Since the1990s, with the rapiddevelopment of information technology, especially the electronic networks amazingexpansion, the global financial markets have presented the trend of network electronicform. Electronic technology and the application of the internet, make online securitiestrading rapidly be promoted, electronic trading platform develops rapidly, securitiestrading technology changes every day. These broke the securities transaction time andregional restrictions. As a consequence, local monopolistic environment of stockexchange has been broken. Our country’s stock exchanges began to implementelectronic securities trading in earlier time. Our stock exchanges have realized the roleof paperless, securities trades from different regions, trading seats immaterialized, andagency transactions from various ways. Due to the wide accessibility of electronic networks all over the world, these will no doubt bring great influences on China’ssecurities industry.Under the background of electronicalization and network, the development ofinformation technology not only brings more competitions and challenges, but alsobrings new problems to the self-regulation. The application of new technologiesallows investors to obtain information more convenient. At the same time,information’s accelerated spread, which will lead to the securities market illegalbehavior occurrence new change. New type of illegal behaviors may appearconstantly. Many problems, such as how to supervise the stock market effectively,how to prevent and stop new illegal behaviors become a realistic problem whichshould be solved urgently.The third chapter discusses the changes in the environment of electronicalization.These changes not only bring influence to the stock exchanges’ self-regulation mode,but also bring problems and challenges to the market regulatory system. Usingregulatory experience abroad as a reference, this paper proposes solutions toself-regulation of stock exchanges.The fourth chapter is "Opening and Cooperating–Self-regulation of Stock Exchangeswith the Trend of Internationalization". The internationalization of stock market is theresult of production and capital internationalization. After the Second World War, themain western countries’ economy rapidly recovered and developed, new industriesrose like mushroom, these effectively promote the internationalization of stock market.At the same time, since the1970s, along with the rapid development of globaleconomic integration, many governments relaxed the regulation of the capital market.In order to get ahead in the international competition, the world’s major stock marketsadopted a variety of ways and means to attract foreign companies and investors.After20years’ efforts, the internationalization of the financing, investment, businessand system of China’s stock market has a large degree of development. Although our stock market value scale is at the top rank, but we also need to speed up the pace ofreform and opening. With the gradual opening of the local market, foreign investorswill enter the domestic market, the market increasingly has diverse varieties and itwill be in an unprecedented revolution period. With global financial integration andstock market internationalization, self-regulation of stock exchanges is facingchallenges and opportunities.The fourth chapter explains the meaning and trend of internationalization, as well asinternational cross-border regulatory cooperation experiences and enlightenments. Inorder to improve cross-border regulatory cooperation of our country, this chapterpresents main mechanisms of cross-border regulatory cooperation between stockexchanges. In the increasingly international situation, this chapter focuses on thepropulsion of international board market construction in Shanghai Stock Exchangeand specific deployment of cross-border cooperation.The fifth chapter is "Innovation and Development: Self-regulation of StockExchanges with the Trend of Specialization——Focusing on the Market Surveillanceof Stock Exchanges". Self-regulation of China’s stock market is gradually developing,but there are gaps between mature markets and domestic market with respect to theoperational level of self-regulation. The chief problem is that domestic market isunder government administrative supervision, so does self-regulation of stockexchanges. In the context of securities market innovation and development, theself-regulation should develop along the direction of professionalization. We shouldproperly handle relationships among regulation&innovation&development, as wellas take a moderate and effective regulation to promote the securities marketdevelopment and innovation.Market surveillance is one of the core responsibilities of stock exchanges. There aremarket surveillance departments to exercise the function of real-time monitoring inShanghai and Shenzhen Stock Exchange. Market surveillance inevitably is under theadministrative supervision in China. In order to promote market innovation and development, market surveillance should focus on developing professionalization inthe long run. It needs to digest and absorb the useful experience at home and abroadto develop professional market surveillance system.The fifth Chapter focuses on market surveillance to investigate self-regulation withthe trend of specialization at the context of the innovation and development of thesecurities market. This chapter firstly introduces the concept of evolution and thepractical experience of the international market surveillance, then respectivelyanalyses three aspects of stock exchanges’ market surveillance, namely, system ofrules, functions and responsibilities, as well as operation procedures. The authorpoints out the problems and deficiencies of current market surveillance system, andthen proposes some useful suggestions.