The Legal System Of China's Regional Equity Market

Regional equity market(the “Regional Equity Market”), as an OTC market and basis of China's multi-level capital market, plays an important role in alleviating small and medium enterprises' financing pressure, cultivating strong and mature enterprises, and promoting the regional economic development. In recent years, China has committed to establishing a multi-level capital market, and therefore the Regional Equity Market is gradually built. But like the New-third Board, the Regional Equity Market is suffering for the excessive expansion of scale, inconsistent system formulation with market development, and other critical problems. In light of the current operation, the practical effect of the Regional Equity Market even deviates from its theoretical orientation. On top of that, the development of Regional Equity Market in China is quite slow. It was until 2012 that the China Securities Regulatory Commission issued a guiding opinion specifying the principles of normative requirement for securities companies conducting trades in the Regional Equity Market. In 2013, the State Council promulgated the implementation opinion which further clarifies the position of the Regional Equity Market. At present, many academic journals and articles dig into the financial effect of the Regional Equity Market, but there is no doubt that the Regional Equity Market needs more regulations and supervisions from the legal perspective. Hence, this thesis tries to explore how to better improve the legal environment for the supervision of Regional Equity Market.The first section is an overview of the Regional Equity Market, mainly including the summary, theoretical analyses, legal aspects, functions, and values of the Regional Equity Market. This section clarifies the position of the Regional Equity Market, distinguishing it from other equity markets. In the last part of this section, the author conducts a comparative study between the Regional Equity Market and the New-third Board to better understand the position and functions of the Regional Equity Market in the whole capital market.The second section focuses on the legal system and defects of the Regional Equity Market. The author reviews and analyzes the current regulations and supervision modes regarding the Regional Equity Market, pointing out such defects as the lack of legislation, omissions of administrative regulations, confusion of normative documents, and lack of supervision for the Regulation Equity Market.The third section is a comparative study for the overseas OTC Markets. Considering that the history of China's capital market is short, the experience of market construction is deficient, and the OTC Market is just established for a few years, the author carries out a thorough research into the legal system of OTC Market in the U.S., Britain, and Taiwan Region, pointing out such parts worthy of reference to China as layered access standards, strict information disclosure system, flexible markets changing system, coordinating supervisory pattern, protection of investors' interests, etc., which provides arguments for the fourth section.The fourth section is suggestions for the Regional Equity Market. Based on the previous sections, the author concludes the basic principles for the establishment of legal system for the Regional Equity Market and puts forward the following four suggestions:(a) enacting laws and regulations for the Regional Equity Market;(b) improving the regulatory and supervisory system;(c) properly handling the relationship among all levels of capital market; and(d) focusing on the protection of invertors' interests.