Study The Feasibility Of Registration System In China

Over passed thirty years since the reform and opening up, China has already becomethe second largest economy in today’s world, which attracts foreign investors comingto our market in great numbers. Meanwhile, our capital market seems also appealingto foreign equity. However, due to the strict Approval System for our securitiesregulation, those interested can hardly make investments in our securities market.Nevertheless, this is not the situation both China and the foreign capital market wantto witness. Moreover, the inflexibility of the Approval System has become more andmore prominent since the IPO market has almost crunched to a standstill having beenshut down so many times which may bring severe damage to our capital market.Therefore, the call of people of the industry for Registration System has beenstrengthened with the coming of the new round of reform of verification system forsecurities issuance. At this point, our government has also changed its attitude. Thegovernment has issued several documents to suggest that the Registration System iscoming right now.On April26,2013, the China Securities Regulatory Commission (CSRC) released anExposure Draft of Public Offering of Securities Investment Fund Management Measures, which has modified the Approval System to the Registration System foroffering of investment fund in its Article5, and has deleted the principle of prudentialregulation so as to attach great importance to the compliance review. On March25,this year, Premier Li Keqiang even proposed the “National Six-Points Package”further demonstrating the determination of our country to introduce the RegistrationSystem.However, as we welcome the Registration System, some problems related haveemerged as well, which deserve the attention of the industry. Some people think theimplementation of Registration System means the super high efficiency of securitiesissuance, and the twenty-day term of review will be no longer a dream. Others regardthe Registration System as a system without merits review. Among those, there aretwo different voices——“the Applauded” and “the Concerned”.“The Applauded”see this as a major driving force to procedural efficiency so as to accelerate the capitalmarket operation and attract investors. On the contrary,“the Concerned” worry aboutthe flood of unqualified listed company which will seriously impair investors’ interest.In fact, the two opinions above are both misconceptions of Registration System. Themisunderstanding could severely affect the strategy of China to introduce theRegistration System as well as mislead our government to build an unsuited system.Furthermore, China has been very different from those countries carrying out theRegistration System in regulation concepts and other ideological theory because ofthe long existence of the Approval System within strong administrative color in ourcountry. As the formation and establishment of system depends on the concepts andideology, we should correct our regulation concepts, regulation purpose and valuejudgment before trying out the Registration System, thus creating favorableenvironment for Registration System.Hence, the paper will begin with the comparative study of Approval System andRegistration System, focusing on the two systems’ advantages and disadvantages respectively so as to explore the suitable market environment of those two accordingly.Then, the paper will review the past of China’s securities regulation systems as wellas the current reform of the Approval System in order to answer whether the ApprovalSystem is still suitable for China. In the paper’s third part, securities issuanceregulation system in both Hong Kong and the United States will be discussed whichwill be deemed as the model system for China’s current system reform. Last but notleast, based on the concepts of Registration System and Approval System and thehistory of China’s securities issuance regulation systems, the thesis will prudentlypropose a feasible pattern of securities issuance regulation systems for our countrythrough comparing and learning from the two different systems of the USA and HongKong.