Study On The Advance Compensation System Of Seeurities Market

Securities market takes an import part in China's market economy.With the major functions such as financing and capital allocation,the securities market not only raises funds for market entities,but also provides investment objects for investors,so that it flows capital to the field with funding requirements and greater benefits to realize the rational allocation of capital resource and promote the development of the national economy.In China's securities market,small and medium investors account for 80% of all investors,but they are taking disadvantage in the securities market due to their lack of expertise and ability to resist risks.Therefore,the protection of the legitimate rights and interests of small and mediumsized investors not only promotes the confidence of social investment and the stable development of the securities market,but also has the function of defending the weak.Recently,the system of advanced compensation in the securities market is a novel measure to protect the rights and interests of investors,which is a kind of investors' compensation method for the current situation China's securities market in the practical experience.The new "Securities Law" was amended and passed on December 28,2019.The securities market advance compensation system was stipulated in the newly added "Investor Protection" chapter,which is the first time that the system has been written into the law.The Article 93 of the Securities Law clarifies the concept of the advance compensation system,that is,when the initiator causes losses to investors due to fraudulent issuance,false statements or other major illegal acts,before administrative penalties or judicial rulings shall be imposed on the responsible market entities,the issuer's controlling shareholder,actual controller or related securities company could make capital contributions and entrust an investor protection agency to reach an agreement with the investor who has suffered losses on compensation matters and pay the eligible investors.After payment is made,the payment shall be made to the issuer and other persons responsible for violations of the law.This system was not originally created by the securities market,but was introduced into the field of securities markets from the fields of social insurance law,consumer rights protection law,road safety traffic law,etc.Therefore,the system has practical experience and theoretical basis.The first attempt of the securities market's advanced compensation system was the case of WanfuShengke fraud statement,in which sponsors took the initiative to fund the victims' compensation in advance.Afterwards,there were two successful practices in Hirisun Infonet Technology(shenzhen)Co.,Ltd and Dandong Xintai Electric Co.,Ltd.Through empirical analysis and comparative research on cases,it is not difficult to find that the current compensation system of the securities market has many advantages and functions,such as reducing the cost of investor rights protection,improving the efficiency of securities dispute resolution,enhancing the goodwill of prior payers,maintaining the security and stability of the securities market,etc.However,as the system has just been established and there is only one general law for it,it results in many problems and disputes in its application,for example,the advance compensation system has many advantages,but it is rarely used in practice;whether the person still enjoys the right of civil litigation after the investor got paid in advance;how to determine the scope of the subject of advance payment,the scope of the target,the payment case and procedures and make them more reasonable.For the solutions mentioned above,some new insights can be obtained through literature research and comparative research on the cases and relevant Chinese and foreign systems.It is possible to establish a public compensation fund for investors in China by referring to the US fair fund system through legal transplantation.In the field of public law enforcement,if the victime investors obtained remedial compensation,there will be less pressure of advance compensation.If the resource applied on the advance compensation system is increased,the advance compensation system will be more practiced.So,the public-private collaborative compensation method is linked with the lawsuit mediation mechanism,so as to build a multi-level and multi-angle securities dispute resolution mechanism.By improving the supporting rules and related measures of the advance compensation system,so it solves problems such as the low application rate of advance compensation and the difficulty in determining the scope of the subject,the payment plan and the payment procedure.Thus,there are some proposals for specifically improving the relevant rules of the system,such as expanding the scope of the subject,establishing a compensation plan using democratic procedures,protecting the claimant's recovering rights and diversifying the claimant's payment risk.In the end,the initiative of the relevant responsible parties to apply the advance compensation system is put into practice,and the system is implemented from paper to the application.It realizes its original intention and purpose of protecting investor rights and interests,so as to maintain the smooth operation of China's securities market.