Speech by Chairman Liu at the 6th General Assembly of Securities Association of China

Dear Chairman Chen Gongyan, representatives, guests, colleagues,


Good morning! Today is a grand reunion of the securities industry. On behalf of the CSRC, I'd like to congratulate on the convening of today's Assembly, extend my regards to all representatives here and all professionals in the business, as well as heartfelt thanks to to friends from all sectors who have rendered great support to the reform and development of China's capital markets.

Since the 18th CPC National Congress, under the leadership of the Party Central Committee with comrade Xi Jinping as the core, the securities industry in China has made substantial progresses driven by concerted efforts in capital strength, development ideology, quality of service, level of standardization, and market competitiveness. Numbers are most convincing. In the past five years, total capital in the securities industry grew by 2.2 times, total assets increased by 2.7 times. Service providers in the industry accomplished equity financing of RMB 6 trillion, debt financing of RMB 15 trillion, and M&A and restructuring deals worth of RMB 3.5 trillion. What the numbers can tell are the gratifying changes taking place in the entire securities industry, which is now playing an ever more important role in driving capital formation, optimizing of resource allocation, and serving the real economy and investors. Specifically, the securities industry is now better positioned to serve national strategy in its awareness, capabilities, and activeness. As the bridge between investors and issuers, investors and markets, and government and markets, the securities industry has on its shoulders both glories and duties. Currently, the Chinese economy is on a stable and sound track propelled by new growths and expanding businesses. With the advancements in comprehensive and deeppened reform and unfolding open-up blueprints, there awaits a bright future to the Chinese capital market. The new era calls for first-class investment banks and will create hard-won opportunities for their growths. I earnestly hope and firmly believe that united we will take the opportunities and assume the responsibilities to build world-class investment banks with Chinese institutional characteristics and cultural features.

First, be dedicated to your core business and provide better service to the innovation-driven strategy and supply-side structural reform, as capital markets are the implied drivers to the reforms. Securities companies shall concentrate on core businesses and internalize new development idea with consistent sense of mission to align with naitonal innovation-driven strategy. Confronted with the pressing task to recude overcapacity, destock, deleverage, reduce costs, and shore up weak growths, as well as reforms in key sectors, securities companies shall play their due role to facilitate optimal allocation of the most-needed resources more efficiently to the real economy. In addition, the securities industry shall earnestly perform due diligence as the market gatekeeper to, firstly, keep out inferior IPO candidates and, secondly, continuously advise the issuers after IPOs. Securities companies shall not have their interests locked in underwriting and sponsoring, but rather develop on M&A, restructuring, asset integration, and professional services that will drive SOE/state assets reform, particularly in reducing overcapacity, cleaning out zombie enterprises, and catalyzing innovation etc. to bolster industrial transformation and upgrading.

Second, be prepared to participate in the "Belt and Road Initiative". The race in financial services for financial resources has been at the core of global competition. Without first-class investment banks, a nation's global competitiveness would be unwarranted. We support competent securities companies to go global and provide one-stop service home and abroad to meet customer needs. Expansion into the global markets is also encouraged, particularly to the "Belt and Road" countries and regions, where development plans require more diversified and convenient financing services. In the meantime, we will be more open and welcome foreign-funded institutions into the domestic markets with better accessibility and expanded connect programs.

Third, be committed to innovation and service improvement. There is no doubt that securities sector will be lifeless without innovation. But innovation is a double-edged sword which has to be wielded with compliance control and risk management and for the goal to meet demands in the real economy. It shall not be used as the coverup to circumvent internal control or external prudential supervision, otherwise, the real economy would be drained up by fictitious sectors, exposing even higher risks. For securities companies, high-quality service is the bedrock to sustain growths and the prerequisite to serve the real economy and prevent financial risks. Companies shall practice KYC principles, create values for clients, and push forward client-oriented product and service innovation, so as to better meet the growing needs of corporate investments and household wealth management. 

Fourth, to stick to the regulatory bottom line and work together for the sound development of China's capital markets. Securities institutions must prioritize risk prevention top on the agenda to maintain market order and secure market stability. To achieve it, all are called upon to devote concerted efforts. Securities companies should not be preoccupied with client solicitation or commission fees, but more importantly fulfill due obligations to protect investors and monitor clients' activities. In the event of abnormal tradings, you are obliged to either stop or report such behaviors in accordance with laws and regulations. Meanwhile, hold your employees to the highest professional standards and work by the code of conduct, contributing to a viable and dynamic marketplace.

Securities Association of China (SAC) is the statutory self-regulatory organization, whose duties are specified in Chapter 9 of the Securities Law. SAC has been well fulfilling its duties of self-discipline, service and promotion for years, and played an increasingly important role. The CPC CSRC Committee highly recognizes the work by SAC. The market also has great support and high expectations on the Association. SAC shall carry forward the hardwork and stick to the right political direction with  enhanced "four awarenesses". While better serve the market, SAC also has great potentials to tap on self-regulation. It is fundamental to reinforce self-regulatory inspections with lessons learned from the past. Disciplinary penalities shall be imposed harshly against violaters of self-regulatory rules. Expose the violaters and keep them on record to hold them accountable. In addition, the SAC shall continue to refine dispute mediation mechanism and investors relief programs to protect the lawful rights and interests of investors. Furthermore, the SAC has a higher mission to promote transparency, fairness, and equitability in the capital markets and strive to be an SRO with stronger self-regulatory capabilities, quality services, industry trust, and market recognition.

Ladies and gentlemen, a new SAC leadership will be formed on today's Assembly. It is my expectation that the new leadership have higher political grounds and sense of duty, who can lead all SAC members to take opportunities and make greater contributions to the sound development of China's capital markets and the upcoming 19th CPC National Congress.

Wish the Assembly a great success! Thank you!


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