Efficiency Of OTC Market In China:Information Asymmetry-based View

Over Counter market (OTC), which refers to regional counter OTC market, and they are the basis of national or regional electronic quotation system, non-listed public companies in equity trading platform. Market securities counter market as the basis of multi-level capital market, its core function is to run through this market, play a role in optimizing the allocation of capital, the outstanding capital flows, or efficiency of the industry. Counter Securities market efficiency is a measure of its optimization resource allocation function. The semi-strong form efficient capital markets is the cornerstone of many modern economic theory was established. For example, the famous MM model, capital asset pricing model, as well as the basic model of derivatives pricing in the semi-strong capital markets with strong applicability. Capital market reached the semi-strong efficient, and the rules and regulations of the market and can effectively rule out insider trading, the trading price of the capital market will be able to effectively reflect market information to provide a prerequisite for the effective allocation of resources. Thus, China’s counter market efficiency conditions in-depth theoretical analysis and empirical research has important implications.Multi-level market in China appears a structural defect,"abnormal" inverted pyramid structure, the motherboard market for a long time, active trading, high maturity, but the capacity is too small, unable to meet the needs of a number of SME financing and the transfer of shares counter Securities market to develop long-term lagging behind and not taken seriously. Counter Securities Market in China has experienced20years of development, However, its market size is too small, a severe shortage of liquidity; from the perspective of system design, the disclosure of information channels for small and low level of information disclosure system, lack of targeted trading system counter market characteristics are incompatible, these issues to the counter Securities market in China there is a serious information asymmetry, causing the market to optimize resource allocation function can not be good.Market "private information", information asymmetry is the objective existence of the capital market, in reality, can never be eliminated, can only be weakened by some means. Asymmetric information environment, the market maker system for the conditions to establish the model of market gains through non-cooperation under the framework of game analysis, the results show that the asymmetric information have a very negative impact on the counter market efficiency.Directly on the level of China’s OTC market efficiency but it can borrow from the motherboard market in China and foreign developed market status of interpretation and analysis, after analysis, can be inferred that the OTC market in China is currently impossible to have the semi-strong type efficiency, which may be in an invalid or weak efficiency stage. This conclusion is subsequently based on the quantitative analysis of stock price information content:According to the agency share transfer system sample stock abnormal return within a certain period before and after the earnings report released point of observation and analysis, the results also showed that counter Securities market in China is not yet reached the semi-strong type levels of efficiency, the level of market efficiency is still relatively low, the optimal allocation of capital function is relatively weak.Learn from developed market experience based on characteristics of the low level of efficiency of China’s OTC market, in order to reduce the level of market information asymmetry as the starting point is proposed to enhance the efficiency of China’s OTC market countermeasures, including two levels:in the trading system level should be introduced to the market maker system to enhance market transparency and reduce market transaction costs, to avoid market risks; in the information disclosure level, first of all, it should be included in the adjustment range of the Securities Act to enhance the system level, should be followed to establish a set of adaptation with the exchange market, the differences in information disclosure system and regulatory approach, rather than a copy of the exchange market system. Supervision on information disclosure from the experience of developed markets, high levels of capital market information disclosure often than low-level market requirements more stringent, but that does not fully adapt to the counter market in China. Counter market in China in the early stages of development, the development of immature, non-standard market, the system is not perfect, market risk, therefore, from the perspective of protecting the investor point of view, and control market risk, the OTC market in China should not be applied than the Exchange loose information disclosure policies.