On The Regulation Of Market Access In Securities Private Offering

The unitary public offering regime in Chinese securities market had constrained the development of securities market. Since the beginning of21st century, private offering has been growing rapidly in China. However, China’s private offering regulations are still in the grow-up period in contrast to international usual practices concerning private offering. There is great gap in respect of legalization, formalization, and professionalization of private offering. We need to build and improve China’s private offering regulations based on the combination of comparative study on international private offering regulations and considering the current development of private offering in China. This dissertation explores basic theory concerning securities private offering, problems existing in China’s securities market, and the practices and experiences of countries or regions around the world. Then based on the systematic analysis of regulations on market access in securities private offering, the author presents some feasible views and advices for the development of China’s securities market and mitigation of risks in securities market. The basic line of reasoning in this dissertation can be divided into the following steps of institutional origins institutional structure-institutional building.Chapter I:Introduction. It provides an introduction of the objective and purpose of the dissertation topic, research scope, current development of relevant studies both at home and abroad, and the research methods and innovative views adopted in this dissertation.Chapter II:Legal Foundation of Market Access in Securities Private Offering. This chapter mainly focuses on two theoretical aspects:legal theories and law and economics theory. Private offering right stems from private rights, and market access right gets involved with governmental public power. So the essence of securities private offering regulations is a game between private rights and public power. Normally speaking, the public power should make some concession in a market economy, with the game between public power and private rights finally reaching equilibrium. Besides, the institutional cost-benefit of securities offering market access regulations is the basis for the existence of such regulations, which also constitutes one of the factors influencing institutional change of securities offering market access regulations, In order to raise the benefits of securities offering market access regulations, we must reduce the opportunity cost of such regulations.Chapter III:Substance of Regulations on Market Access in Securities Private Offering. This part uses the private offering regulations of the United States as a focal point. In the meantime, it also makes a comprehensive study on the similarities and differences of private offering regulations in various countries or regions, and in this way presents the deficiency in China’s construction of legal regime of securities private offering. Registry immunity is the core regulation in securities private offering and also the factor making it different from securities public offering regulations. In order to maintain the advantages of securities private offering, most countries or regions don’t have compulsory information disclosure requirements, with instead voluntary information disclosure requirements. This is the demand of both the building of securities private offering market and the monitoring of securities market. There needs to be appropriate regulation of securities market. Over-strengthening of administrative monitoring of securities market will not make it more secure and stabilized, but only lead to market failure. On one hand, we need to harness the advantage of quick financing in securities private offering market, on the other hand, the transferring of shares cannot be made without restraints. The reselling restraint requirement is just a kind of measure matching the demand of market. The registry immunity, reselling restraint requirement, voluntary information disclosure requirement, and monitoring of securities private offering constitute the basic system of the whole process of securities private offering. The securities market is also a pluralized market. Only when different levels are set up to match the need of securities private offering market, and different rules apply to different levels, can the whole securities private offering market has efficient, secure, and orderly development.Chapter IV: The Selection of Ways and Modes for Market Access in Private Offering. Many countries or regions adopt the ways of standard review or peer review to review securities private offering and qualification and market access of relevant entities. Based on the multi-level market structure, they adopt both the pro forma review and substantive review in terms of specific ways of market access. Chinese securities market doesn’t have clearly-defined different levels. And the proliferation of monitoring and administrative approval requirements by securities regulatory authority, combined with the over-restrained competence of stock exchanges, has led to a lot of problems in Chinese securities market such as slow development, disorderly private offering market, etc. Due to the laggard in securities market development and incomplete rules and regulations, in particular the lack of credit rating mechanism, China currently cannot follow the rules of American securities private offering regulation of no requirement on the qualification of issuers. Instead, considering the security of securities market and the balance of interests of issuers and investors, we need to have requirement on the qualification of issuers. In accordance with current conditions of Chinese securities market, we need to put a stress on the reviewing of issuers’ corporate governance, reputation, and good will, etc., not just focusing on issuers’ asset status, which could be left for the market to establish standards of wealth measurement. The prosperity of securities market is definitely dependent on internationalization. Based on different national conditions, market access of foreign issuers and investors has always been a stress point in national regulations around the world. China’s "Double Q" regulations have not been set up for a long time, but developed very fast. They have relatively stricter standards for market access. However, according to the market access commitments undertaken by China’s accession to the WTO, the standards for market access need to be gradually lowered.Chapter V: International Convergence of Market Access in Securities Private Offering. International convergence of securities private offering is the consequence of development of electronic network and global economy, which has lead the global securities markets to the same high-speed train. The characteristics of private offering determine that it cannot have a uniformed rule on disclosure of financial information or requirements on corporate governance like those in public offering. The development of securities markets need more international cooperation among the entities involved in securities private offering. This means gradually convergent national standards and international coordination and regulation. In respect of private offering regulations, countries or stock exchanges around the world have been marching toward the gradual elimination of technical barriers, which has led to converging and developing private offering regulations. It has included both the legal convergence represented by EU securities market formed under the uniformed directives, and the adoption of self-disciplinary securities trading rules represented by the NYSE-EURONEXT Start-ups Trading Market. Yet the means available to adjustment by market forces in global securities market are definitely limited. There still need regulatory measures by various governments, which include both the protection of domestic securities market and restriction of over-competition or monopoly in global market, In China, the securities market is still in relatively low level of development, and the securities private offering market is also not well-developed. So we need to keep in track with international practices in terms of legislation and regulatory measures.Chapter VI:Construction of China’s Regulation on Market Access in Securities Private Offering. There is still great deficiency in the legal construction of regulations on securities private offering in China. The market for private offering lacks a formalized and orderly environment, with an urgent need for legal institution to regulate it and a far-sighted legal framework. China’s national conditions determine that we cannot just copy overseas securities private offering regime. We need to combine Chinese experiences with overseas successful experiences while building China’s securities private offering regime. It has been shown that the unitary structure of securities market has been unable to meet the demand in reality, and the building of multi-level trading system of securities market has become more necessary and feasible. We should build a complete securities market system with the Major Exchange and Exchange for Start-ups at the upper level, the new OTC market and regional OTC market at the middle level, and private equity offering and trading market as the basis. There are different regulatory agencies in charge of the securities market at different levels. They need to be interdependent, complementary to one another, and grow simultaneously.