Research On Self-regulation Of Over-the-Counter Market Based On Cooperative Game Theory

The National Equities Exchange and Quotations(hereinafter referred to as the New Third Board)was formally established in January 2013.Together with the regional Over-the-Counter(OTC)markets established in various provinces,China's multi-level OTC market system has gradually formed.The number of listed companies in the OTC market has far exceeded exchanged market.It is unrealistic that the OTC market is entirely supervised by the government,and the importance of self-regulation is increasingly prominent.Historically,China's OTC market has been self-managed by market operators,but it has not effectively restricted its own risk.Ultimately,government supervision intervened,resulting in the OTC market being cleaned up.If the risk of the OTC market surges,repeating the mistakes to be cleaned up,it will cause huge costs with the current market size.Therefore,it is of practical significance to find out the issues that has been affecting the efficiency of self-regulation in China's OTC market and carry out related research.Based on study of the history of self-regulation,this doctoral dissertation finds that there are mainly three problems in China's OTC market:Firstly,government supervision has reduced the efficiency of self-regulation;Secondly,industry self-regulation is absent;Thirdly,self-regulation of market operators is unstable.The dissertation focuses on the above problems.China's OTC market has the characteristics of spontaneous,competitive and interactive,and the products and services it provides are usually characterized by non-standardization,innovation,and niche.In addition,China's OTC market is large in scale and multi-level.Therefore,market participants have stronger bargaining power in self-regulation.Compared with other forms of supervision,the most prominent feature of self-regulation is that self-regulation organizations represent the interests of the supervisees.By service and supervision,self-regulation organizations are more likely to reach cooperation with market participants to motivate them to obey supervision.So the author chooses cooperation game theory to study self-regulation supervision.By constructing a cooperative game model of self-regulation,this dissertation finds that the incentive and constraint factors of self-regulation correspond to the objective functions and constraints of Nash's program of cooperative game.That is,the simultaneous improvement of incentive and constraint mechanisms of self-regulation can lead to the realization of cooperation games.From a dynamic point of view,the cooperative game is achieved after bargaining between the self-regulation organization and the supervisees.This dissertation uses Rubinstein's bargaining model to conclude that the bargaining cost of both sides affects the division of interests.The comparison of the benefits of both sides also constitutes incentives to self-regulation.Based on the above theories,the study of the reality of the self-regulation of China's OTC market can be transformed into the study of two incentive factors and one constraint factor hypothesis.Self-regulation incentive mechanism from the perspective of cooperative game includes two aspects:Firstly,there is a comparison of benefit segmentation between self-regulation organizations and the supervisees when bargaining;Secondly self-regulation organizations and the supervisees achieve maximum common interest after reaching an agreement.The first level of incentive:the interests of self-regulation organizations and the supervisees are inconsistent,and cooperation needs to be achieved through bargaining.The existing stratification method of the New Third Board corresponds to the supervision cost of the financial indicators of the listed companies by the National Equities Exchange and Quotations Co.Ltd.(hereinafter referred to as NEEQ Corporation).and whether the equity financing is used as the standard stratification method corresponds to supervision costs of the NEEQ Corporation's market indicators.The latter's supervision costs are siggnificantly lower than the former.The DEA model can measure the financing efficiency changes corresponding to the two types of stratification,and then verify that the stratification measures of low supervision cost are more effective.This dissertation further analyzes the cost factors that affect the incentive mechanism to observe the differences in supervision costs between the NEEQ Corporation and the operators of regional OTC market.The second level of incentive:There is a natural and consistent interest for the self-regulation organization and the supervisees,and the same interest is the result of the game.This part reviews the changes in self-regulation organizations in the OTC market in the United States,sums up the manifestation of the expansion of common interests in self-r-egulation and the reasons for the lack of industry self-regulation in China.The self-regulation restraint mechanism from the perspective of cooperative game is mainly analyzed from the constraint path and boundary of the government regulators to self-regulation.The government regulators define the feasible allocation of self-regulation through legal means and market structure,and affect the disagreement payoff allocation in self-regulation.When self-regulation is ineffective,it is easier to observe the boundaries o f government regulators that restrict self-regulation.This dissertation collates two conditions of pre-and post-constraint:The pre-constraint is equivalent to government supervision directly determining and changing the behavior of the two sides of the game,and signing a binding agreement;The latter refers to the government regulators re-arranging the initial conditions between self-regulation organizations and the supervisees,and promoting both parties to cooperate again.Finally,based on the analysis of the penalties for the violation of laws and regulations in the New Third Board,it is considered that the government regulators have insufficient restrictions on self-regulation currently.This dissertation mainly draws the following conclusions:Firstly,the self-regulation cooperative game model incorporates incentives and constraints that affect the efficiency of self-regulation into a unified framework,and verify that the promotion of cooperation between self-regulation organizations and the supervisees will improve the efficiency of self-regulation in the OTC market.Secondly,the high bargaining cost of the operators of China's OTC market.lack of regulatory measures by the securities industry associations to increase industry interest,and the existing market structure have all affected the self-regulation incentive mechanism.Thirdly,China's government regulators have insufficient constraints on the self-regulation of the OTC market.The crux of the matter lies in the lagging legislation and fragmented market structure.The restrictions of the CSRC on the function of the regional OTC market are also reflection of constraints.Based on the above research and the issue of China's self-regulation,the author proposes the following suggestions:Firstly,the upper lavw for the self-regulation of the OTC market should be established to clarify the legal status of the OTC market and the relationship between government supervision and self-regulation.Secondly,the CSRC should tighten the self-regulation of the OTC market.The strong restraint of the CSRC on self-regulation comes from both the law enforcement powers granted by the securities law and the unified supervision of the OTC market at all levels.Thirdly,the status of industry self-regulation in the OTC market should be highlighted.As China's OTC market functions mature and lighter operation of market operators emerges.industry sel f-regulation will be more relied on.The Securities Association ofChina should continuously improve the supervision facilities and services so as to expand the common interests with the supervisees,and promote the formation of a supervision system based on industry self-regulation.Finally,market operators should reduce regulatory costs by improving market functions to motivate the supervisees to obey self-regulation consciously.