On January 19th, the China Securities Regulatory Commission (CSRC) held a press conference, during which Zhou Xiaozhou, the main person in charge of the CSRC's Comprehensive Business Department, stated that the CSRC will further deepen the reform and opening up of the capital market, adhere to the three principles of registration system reform, focus on information disclosure, adhere to the basic structure and institutional arrangements of the registration system, comprehensively strengthen strict supervision in accordance with the law, and promote the deepening and implementation of the stock issuance registration system. What are the key information of the press conference? Jingtai interprets for you.

01 Interpretation 1 | The reform of the registration system is not about "moving IPO review from the China Securities Regulatory Commission to the exchange". Zhou Xiaozhou, the main person in charge of the Comprehensive Business Department of the China Securities Regulatory Commission, stated that the reform of the registration system is a profound transformation from the underlying logic to ideological concepts and behavioral methods, involving the entire chain of capital market entry and exit, primary and secondary markets, investment and financing, legislation and law enforcement, and other fields. It is not what others say. "The registration system is about moving IPO review from the China Securities Regulatory Commission to the exchange". Overall, the main institutional arrangements of the registration system have been basically established, the basic system of the capital market has been systematically reshaped, the market's reverence for the rule of law has become stronger, the market ecology has been continuously purified, the legitimate rights and interests of small and medium-sized investors have been more protected, and regulatory authorities have become more transparent and subject to various constraints. The comprehensive implementation of the registration system has been in place for over 9 months, and currently, the overall operation of the relevant system arrangements is stable and orderly. Regarding transparency, openness and transparency are the foundation of the credibility of the capital market. Since the reform of the registration system, the China Securities Regulatory Commission and the exchange have always adhered to the principles of "open door review" and "open door supervision". They have transformed the matters that can be judged by investors in the issuance conditions under the approval system into information disclosure requirements as much as possible, comprehensively cleaned up "pocket policies" and hidden thresholds, and made the standards, procedures, results, and other aspects of the registration review public, actively accepting supervision from all aspects of society. Zhou Xiaozhou said, "At the same time, efforts will be made to strengthen the transparency of the entire regulatory and law enforcement chain, allowing power to operate under the sunshine. A concise and scientific rule system will be established, and regulatory rules and inspection and punishment results for issuance, listing, and institutions will be made public to the society."

02 Interpretation 2 | The registration system is not "anyone who wants to publish can publish, and as much as they want to publish". Zhou Xiaozhou said, "Implementing the registration system is not about letting it go or letting it go, but strengthening supervision and law enforcement in all aspects of the entire chain before, during, and after the implementation, with stricter and more accurate management." Zhou Xiaozhou said, on the one hand, the registration system does not mean relaxing quality requirements, but rather stricter review and control. It is not about anyone who wants to publish and how much they want to publish. Adhere to the principle of "taking responsibility upon declaration", and severely punish "passing through levels with illness" and "withdrawing upon inspection". "On the other hand, implementing a registration system requires strict punishment and law enforcement, as well as severe punishment and chaos. We adhere to the principle of 'zero tolerance' to crack down on serious illegal and irregular behaviors such as fraudulent issuance and financial fraud, and promote the construction of a three-dimensional punishment and restraint system with administrative penalties, civil compensation, and criminal accountability to protect the legitimate rights and interests of investors. We will promote the establishment of a Chinese characteristic securities collective litigation system and gradually normalize it, improve the system of securities and futures administrative law enforcement party commitments, advance compensation, fraudulent issuance orders for repurchase, and promote the implementation of relevant cases, forming a demonstration effect." Zhou Xiaozhou said.

03 Interpretation 3 | Adhere to the principle of "all withdrawals should be made" to prevent "one withdrawal". Guo Ruiming, Director of the Listing Department of the China Securities Regulatory Commission, stated that the next step of the Commission will continue to consolidate and deepen the normalized delisting mechanism. One is to continue to facilitate diversified exit channels, support the effective integration of resources through absorption and merger, and promote the improvement of the bankruptcy reorganization system. The second is to strictly implement the delisting rules, adhere to the principle of "all withdrawals should be made", severely crack down on malicious "shell" behaviors such as financial fraud and market manipulation that accompany the delisting process, and maintain the seriousness of the delisting system. The third is to resolutely prevent "one retreat". If the company and related parties violate laws and regulations, even if delisted, they must be firmly held accountable; If illegal and irregular behavior causes losses to investors, support investors in using various compensation and relief measures stipulated in the Securities Law to protect their own rights and interests; Promote delisted companies to enter the delisting sector in accordance with the law and in an orderly manner, and protect basic rights such as the right to information and trading rights of investors. He said that we are also concerned about the view in the market that the delisting rate of A-shares is not high. The core of delisting reform is to adhere to the principle of "everything that should be retired should be retired". While being able to retire, it is also necessary to retire steadily, and the more retired, the better. He stated that the delisting of overseas markets represented by the United States is mainly through privatization, absorption and merger by other listed companies, and voluntary delisting. In some markets, voluntary delisting accounts for more than 90% of the total delisting, and the proportion of truly mandatory delisting is not high. These companies delisting is a market-oriented choice made proactively based on their own strategic considerations. There are many companies that have been forced to delist from A-shares, but the number of cases of restructuring and voluntary delisting is significantly less than in overseas markets. Data shows that in the past three years of reform, a total of 127 companies have delisted, of which 104 have been forced to delist, nearly three times the number of forced delisting companies in the 10 years before the reform.

Interpretation 4: Promoting and Improving the Legal System of the Capital Market from Three Aspects Cheng Hehong, the head of the Rule of Law Department of the China Securities Regulatory Commission, stated that the Commission will focus on the following three aspects of work: firstly, to formulate and improve the supporting system rules of new laws and regulations, such as the Futures and Derivatives Law, the New Company Law, and the Supervision and Administration Regulations of Private Investment Funds, to ensure the implementation and consistency of the new legal system, including revising and formulating the Supervision and Administration Measures for Futures Companies, the Guidelines for the Articles of Association of Listed Companies, and the Supervision and Administration Measures for Private Investment Funds. The second is to cooperate in the formulation and improvement of relevant laws, administrative regulations, and judicial interpretations. Including drafting and formulating regulations on the supervision and management of listed companies, and researching and revising regulations on the supervision and management of securities companies; Cooperate with relevant judicial authorities to formulate and improve relevant judicial interpretations, including insider trading and market manipulation. Thirdly, we will continue to carry out the daily work of amending, abolishing, and releasing regulatory documents of the China Securities Regulatory Commission.

05 Interpretation 5 | High emphasis on dynamic balance between financing and investment. Shen Bing, Director of the Institutional Department of the China Securities Regulatory Commission, stated that the China Securities Regulatory Commission has always attached great importance to the dynamic balance between financing and investment. After the reform of the stock issuance registration system was launched in 2019, the overall balance between investment and financing in the capital market has maintained, and there is no need to only focus on financing and not on investment. From the financing perspective, Shen Bing stated that the total amount of A-share IPOs in the past five years is 2.2 trillion yuan, with a total refinancing amount of 3.8 trillion yuan, and a total financing amount of about 6 trillion yuan. From an investment perspective, Shen Bing stated that he actively promotes various investors to increase their investment in the A-share market. The total circulating market value of A-shares held by public funds, pension funds, insurance and other medium - and long-term funds has increased from 6.4 trillion yuan to 15.9 trillion yuan, a growth rate of more than double, and the shareholding proportion has increased from 17% to 23%. Equity funds have increased from 2.3 trillion yuan to 7 trillion yuan, and their proportion in the size of public funds has increased from 18% to 26%. The circulating market value of A-shares held by northbound funds has increased from 0.7 trillion yuan to 2 trillion yuan. The circulating market value of A-shares held by individual investors has increased from 10.8 trillion yuan to 22.1 trillion yuan. Overall, the policy implementation effect meets expectations. As of now, the balance of securities lending has decreased by 23.4% compared to the initial implementation of the new regulations; The decline in lending balance of strategic investors was even greater, reaching 35.7%. In addition, after the release of the new regulations, there were new stock listings for senior strategic investors, and there was no lending during the initial stages of listing, indicating that the implementation effect of the new regulations is good.