China's Second Board Market, Legal Issues Studied

Second board is a new securities market, which specializes in providing funds for those little and new companies. The differences between second board and main board are the object of servicing and rules of working. Second board aims at those companies, which have the prospect of developing and high scientific and technological content. In second board, the rules of working show the creative character. One of the typical examples is the adopting of market maker system (or quote-driven system).NASDAQ is the most successful and influential second board among the world. It has greatly promoted the development of high scientific and technological trade of U.S A and has been the launcher of new economy by its clear servicing object and perfect system of devising. Under the influence of NASDAQ other second board has been set up in other countries and districts since the 1990's.Our country also needs second board. As one important part of capital market, second board could satisfy little and new companies' funds need. Meanwhile it could promote the adjustment of economic structure by supplying funds for those companies that have the prospect of developing and high scientific and technological content. Setting up of second board also provides a way that ventures capital could realize its increase. From the view of reality our country has the capacity to build second board.Adjustment of system will be the key when second board is set up. It can be shown in law by (1) the aim of second board: As a new securitiesmarket, the object of servicing has been decided strictly. Second board could only service those little and new companies which have the prospect of developing and high scientific and technological content; (2) the pattern of working: It's essential that the countrywide second board should be built in Shen zhen stock exchange. At the same time the lower second board should be built in some district. There is some association between the two degree of second board; (3) the stock issue system: In second board registering system should be adopted in issuing securities because it can better meet the demands of second board; (4) the trading system: Because of our country's reality the writer agrees with the view of reference files about second board, which means at the beginning of building second board market maker system will not be used and double auction will be continued. When requirements are met pure market maker system should not be used because of its shortcomings in nature, either. A better way to solve the problem is that we may adopt the long suits of the two trading system; (5) the stopping transacting system: The writer suggests that it's the stock exchange that should decide which stock meet the requirement of stopping transacting. If it can be demonstrated that relating people should be responsible for the stopping transacting of stock, they should pay the damage that they made for those investors.