Study On Regulation Of Sponsor Arbitrage Trading

Since the Growth Enterprise Market launched board in September 2009, sponsors arbitrage securities cases have continued to appear which shows a growing trend. The behaviors of sponsors arbitrage trading violate the principle of good faith and independent status. Without performing their obligations, the sponsors become the interest of alliance with the issuers and listed companies. The sponsors meet all requirements of the issuers and listed companies, even in the use of packaging, boasting, landscaping and other law-violation means to stock recommendations not to meet the conditions of issuance. Sponsor arbitrage trading not only violate the sponsor duties, which has fundamentally destroyed sponsor system, but also become the sponsor system which conspired by sponsor and issuers and listed company to fraud investors, illegal exorbitant profits tools. Therefore, the problem of how to effectively prevent the sponsor arbitrage trading, give full play to the sponsor system in order to improve the quality of issuers and listed companies, and the role of protecting the interests of investors has become an academic and practical urge to be studied and solved.In view of the form of expression, causes and legislative loopholes, the author tries to improve the regulations of sponsor arbitrage trading and provides some legislative suggestions. This article mainly includes four parts:The first part:"The summary of sponsor arbitrage trading". It specifies the content and features of the carry trade and defines that the sponsor arbitrage trading is illegal. It emphatically analyzes the forms of sponsor arbitrage trading:stock companies holding stocks directly and sponsor representatives'illegal shareholding, and generalizes the arbitrage trading procedure into three steps:"sowing", "cultivation" and "harvest".The second part:"Harms and causes of sponsor arbitrage trading". On the basis of clearing the connotation, value and responsibilities, this paper analyzes the harms of sponsor arbitrage trading:violating the sponsor duties and sponsor system of the purpose of legislation; meanwhile, anatomizing the reasons that cause the sponsor arbitrage behavior occurred frequently. They are:the economic benefit drive, PE regulatory lacunae and the deficiency of China's sponsor system.The third part:"Laws on the regulation of arbitrage sponsors and its shortcomings". This part analyzes the legislative loopholes in arbitrage trading regulation sponsors in current laws, which concludes that current legal system existing deficiencies of the sponsors in six aspects:Scope of applying for sponsor qualification, third status of independent sponsor, internal controlling system, sponsor of obligation deadline, legal responsibility.The fourth part:"Legislative proposals on improving the regulations of sponsor arbitrage trading". In the light of summarizing the previous parts, author proposes the following legislative proposals:first, improve the IPO pricing mechanism while reducing sponsor arbitrage trading income; second, manipulate the exchange openly and equitably. Third, make further effort to perfect the country's sponsor system, as well as strengthen the supervision of the sponsors.