Exploration Of Securities Repurchase Type Transactions As One Of The Financing Instruments In Regional Equity Markets

With the implementation of the new Securities Law,the legal status of the regional equity market has been established.As the "tower base" of China’s multi-level capital market,the regional equity market serves small,medium and micro enterprises,which account for more than 99% of the total number of enterprises in China,and it needs continuous innovation and development together with the exchange market and the New Third Board market.The 19 th and 20 th National Congresses of the Party called for the reform of the national financial system to strengthen the proportion of direct financing in the capital market.Regional equity markets,due to their own characteristics and the restrictions imposed by laws and policies,cannot help companies raise direct financing through IPOs on the Shanghai and Shenzhen stock exchanges,or through private offerings on the North China Stock Exchange and the New Third Board market on a national scale.This paper concludes that,in the context of financial system reform,regional equity markets can introduce securities repurchase transactions to enrich their direct financing paths,i.e.,equity pledged and bought-back repurchase transactions and bond pledged and bought-back repurchase transactions,so as to break the institutional shackles of imperfect financing functions of regional equity markets.Based on the above considerations,this paper discusses the institutional construction of securities repurchase transactions as the financing path of regional equity markets,and is structured into three part.The first part focuses on the financing function of the regional equity market and its institutional barriers.Due to their natural weaknesses in creditworthiness,MSMEs are unable to obtain sufficient direct or indirect financing in the capital market.The establishment of regional equity markets is to provide financing channels for MSMEs within a specific geographical area.However,the current financing scale of regional equity markets in China is much weaker than that of the exchange market and the New Third Board market,and MSMEs with sufficient financing needs are not yet able to complete financing through the financing channels provided by them.The reason for the imperfect financing function of the regional equity market is the institutional barrier of its financing function,i.e.,it lacks attractive financing paths and independent top-level design compared with the exchange market and the New Third Board market.Enriching the financing paths of regional equity markets is a must to solve the shackles of its financing development.Based on the characteristics of private placement and geographical location,regional equity markets cannot conduct nationwide initial public offerings,so they can only consider introducing other types of transactions to expand their financing paths.Part 2 analyzes the feasibility of choosing securities repurchase transactions as a financing route for regional equity markets.The feasibility includes two aspects: first,the value consideration of choosing securities repurchase transactions,i.e.,the choice of securities repurchase transactions can enhance the financing capacity without breaking the private placement,and is also in line with the national policy requirement of strengthening the proportion of direct financing for small and medium-sized enterprises.At the same time,after the entry into force of the Civil Code,regional equity markets,as "securities registration and trustees within provincial administrative regions",can also register equity pledges,which also provides institutional support for the introduction of securities repurchase transactions;second,whether the transaction structure of securities repurchase transactions is suitable for regional equity markets.The question that needs to be addressed in the suitability analysis is whether the functions of regional equity markets can meet the requirements of the structure of securities repurchase transactions.In the exchange market and the New Third Board market,securities repurchase transactions require registration and settlement institutions to register the transfer of ownership or the establishment and change of pledge of the subject of the transaction in order to guarantee the appearance of the commercial transaction.The regional equity market,as a securities registration and depository within the provincial administrative region,has registration and settlement functions and is able to meet the requirements of this transaction structure.Therefore,securities repurchase type transactions are suitable as its financing path.Part 3 focuses on the introduction and institutional structure of securities repurchase transactions as a financing route in regional equity markets.The institutional structure is discussed in three aspects.First,the "introduction of institutional structure",through which statutory procedures or regulatory rules the regional equity market should create a new financing path.The current legislation does not provide for this,combined with the current practice,the provincial people’s government can consider the introduction of regulations or other regulatory documents;second,the "registration system construction",the introduction of securities repurchase transactions after the registration of how to resolve matters.For repo transactions of bond type,the regional equity market will assume the registration function of the former China Securities Clearing.For equity repurchase transactions,the equity changes under equity buy-back transactions are subject to "registration adversarialism",and whether or not the regional equity market can act as its registrar will not materially affect the transactions themselves.The Civil Code does not respond to the division of ownership between the regional equity market and the statutory registration authority in relation to the registration of equity pledges,and in light of current practice,the regional equity market and the statutory registration authority can be considered to resolve the registration of equity pledges in conjunction with each other.",that is,the legal application of securities repurchase type transactions as a regional equity market financing path of disputes.The pledged repo type transaction does not transfer the ownership of the underlying securities in the course of the transaction,which belongs to pledge under traditional security law,and the legal rules on pledge should also be applied in case of disputes;while the securities buy-back type transaction is similar to the cession guarantee in atypical security,which can be used as the securities buy-back dispute in view of the wide use of cession guarantee in commercial practice and the rich rules on dispute disposal The rules are similar to those for atypical guarantees.