The Behavioral And Regulatory Study Of China Privately Offered Fund

With the intensive globalization in both financial and economic field, the privately offered funds’gradually obtained a essential role in stock market in general, especially after the global financial crisis in2007. The study of the privately offered fund’behaviors and regulatory methods becomes a popular issue in academia. This paper comes up with the influence of institutional investors on the stability of the stock market, based on theories of Finance and Market Regulatory. Because the influence is determined by several factors such as the maturity of the stock market, mass environment (legal environment, regulatory environment, the performance of the market、the condition of macro-economics)of the stock market and so on, simply assert whether or not institutional investors can act as a positive force of stabilizing the market is not objective. In this way, this paper views the issue through the comparison of the regulatory experience in developed regions and the analysis of the privately offered funds’behaviors, proposing the regulatory advices towards the development of privately offered fund in China stock market.1. The China privately offered funds have characteristics as follow:the pursuit of positive yields, the flexible investment strategies and the diversified financial instruments. However, differences in the history path, the product structure, size and performance lead to the imbalance of the development of privately offered funds, which greatly limits the effectiveness and efficiency of the regulatory performance on privately offered fund.2. On the one hand, the efficiency of company will benefit from the high portion of shares held by privately offered funds. On the other hand, the improvement of the efficiency must be reflected on the Secondary Market. In this way, such mechanism is going to motivate the privately offered funds to stick on the Value Investment. Then, the stability of the stock market is likely to be established. That is to say, the regulatory behavior should lead the construction of above mechanism which is also help the investor protection to some extent. 3. The privately offered funds have the characteristic of feedback trading. So the behaviors of the privately offered funds do not always act as a positive force to stabilize the stock price. Sometimes, the privately offered funds act as an amplifier on the performance of the stock market.4. The investment behaviors of privately offered funds have limited rationality. They seldom insist on the value investment in short term. Their behaviors are more likely to be influenced by the stock indexes and several other Small-cap stocks. That is to say, the fluctuation of small-cap stock is a essential reference for the investment of privately offered funds. Such behavior increases the risks which are not good for investor protection and for the stability of the market as a whole. That illustrate that the importance of proper regulation on privately offered funds can never be emphasized too much.5. The privately offered fund regulation in China should learn from the advanced stock regulatory in the United States. In addition, the general design of the regulatory pattern should take the regulatory systems in England and Hong Kong as references.(1) Reform the framework of regulation. Unified the principle of general regulation, select function-oriented regulatory pattern, diversify the regulatory subjects and proper the differentiation of regulatory strategies.(2) Perfect the means and the content of regulatory. Less restriction on censorship of the financial instruments, standardize the entrance of the institutional investors and open up the relevant information access.(3) Apply the regulatory strategies which combine the interior mechanism with outside environment. Cultivate the qualified fund managers, strengthen the risk management inside the privately offered funds, establish the ranking system of privately offered funds and focus on the international cooperation.