Protecting small and medium-sized investors is to protect the capital market

——Chairman Xiao Gang published a signed article in the people's daily

Source: People's daily

For a long time, China's capital market has paid more attention to financing in the system design, and paid insufficient attention to the protection of the rights and interests of small and medium-sized investors, forming an unbalanced pattern of strong financiers and weak investors. Under the principle of "capital majority decision", the phenomenon of "dominance of one share" is widespread, which provides conditions and opportunities for encroaching on the rights and interests of small and medium-sized investors

Therefore, to truly defend the principle of market fairness and equality, we must take a clear-cut stand to protect small and medium-sized investors

Protecting the legitimate rights and interests of small and medium-sized investors is not only the internal requirement for the healthy operation of the capital market, but also an effective way to maintain social fairness and justice. In the development of China's capital market, small and medium-sized investors play an irreplaceable role. At present, there are nearly 90 million individual investors opening accounts in Shanghai and Shenzhen stock exchanges, of which the transactions completed by investors below 500000 yuan account for about 60% of the total stock transactions. This is a remarkable feature of China's capital market. It puts forward many new requirements for the internal quality, operation efficiency and market supervision of the capital market. It is urgent to build a series of targeted institutional arrangements and policy measures.

The protection of the rights and interests of small and medium-sized investors has become a prominent problem restricting the development of the capital market

Asymmetric information, imperfect investment return mechanism, illegal behaviors of listed companies and poor channels for safeguarding rights have all damaged the interests of small and medium-sized investors

The current system has insufficient special arrangements for the protection of investors' rights and interests. Due to historical reasons, for a long time, China's capital market has paid more attention to financing in the system design, paid insufficient attention to the protection of the rights and interests of small and medium-sized investors, and there are few targeted institutional arrangements, forming an unbalanced pattern of strong financiers and weak investors. The normative principles of the protection system for small and medium-sized investors are general, lack of operability, and there are many obstacles to the exercise of rights, even in vain. Some listed companies, controlling shareholders and actual controllers do not respect the opinions of small and medium-sized investors and do not pay attention to their interests and reasonable demands in the company's major decisions. Under the principle of "capital majority decision", the phenomenon of "dominance of one share" is widespread, which provides conditions and opportunities for encroaching on the rights and interests of small and medium-sized investors, resulting in "tunnel effect". Major shareholders take the interests of many small and medium-sized investors for themselves through various "underground tunnels". Therefore, to truly defend the principle of market fairness and equality, we must take a clear-cut stand to protect small and medium-sized investors. Protecting small and medium-sized investors is to protect the capital market, and protecting small and medium-sized investors is to protect all investors.

Information asymmetry seriously infringes on the rights and interests of small and medium-sized investors. Capital market is a trading market based on information pricing. Let small and medium-sized investors fully enjoy the right to know and have fair access to all information that should be made public is the basic premise for safeguarding their legitimate rights and interests. Because the securities issuer, its controlling shareholders and actual controllers are the producers and controllers of securities information, they are in an absolute dominant position in information possession; Securities operating institutions and other intermediary service institutions are in a relatively advantageous position to obtain information in close proximity; The majority of small and medium-sized investors are in the most peripheral disadvantage, coupled with the lack of knowledge, experience and professional ability, it is difficult to obtain real and accurate information in time. This situation of information asymmetry is easy to produce the problem of agent integrity and mislead small and medium-sized investors.

The imperfect investment return mechanism makes it difficult to form a long-term investment concept. When the rate of return of risk-free funds in China is high, the overall return on investment in the capital market is low. According to statistics, from 2001 to 2011, the proportion of cash dividends of China's Listed Companies in net profit was 25.3%, while that of overseas mature markets was usually about 40%. Since 2006, the average annualized dividend yield of listed companies has been only about 1%. At the same time, listed companies have a single way of return, and some even use cash dividends to cash out. Due to the imperfect investment return mechanism, it is difficult for investors to form stable return expectations. Speculation such as speculation in new products, speculation in small products and speculation in poor products is prevalent, and fast forward is common, which is also an important reason for the losses of small and medium-sized investors.

Violations of laws and regulations directly infringe on the vital interests of small and medium-sized investors. Small and medium-sized investors lack the ability of risk identification and prevention, and are more likely to become the target of various violations. The illegal information disclosure of listed companies leads to the losses of small and medium-sized investors due to making wrong investment decisions. The illegal behavior of insider trading may cause losses to investors who conduct reverse operation due to the fluctuation of stock price. Market manipulators manipulate the transaction price or volume by means of capital, shareholding and information advantages, so that many small and medium-sized investors who do not know the truth are misled to participate in relevant transactions and their rights and interests are infringed.

Rights protection channels are not convenient for small and medium-sized investors to effectively seek legal relief. The responsibility for handling complaints of market operators is not clear, the diversified dispute resolution mechanism in the capital market is not perfect, the professional mediation of securities disputes has just started, the civil compensation litigation system needs to be improved, and there are still many difficulties in suing and providing evidence for small and medium-sized investors. The organizational system of investor protection is not perfect, and many small and medium-sized investors do not have a strong sense of rights. The survey shows that 85% of small and medium-sized investors do not know what rights they have, how to exercise and protect their rights, and only 2% of small and medium-sized investors can read the financial information disclosed by listed companies; In recent three years, the average participation rate of online voting shareholders in the general meeting of shareholders was less than 0.25%.

Comprehensively build an institutional system to protect the legitimate rights and interests of small and medium-sized investors

Protect the right of small and medium-sized investors to know, improve the voting and voting mechanism of shareholders of listed companies, establish a diversified dispute resolution mechanism, and improve the compensation system for small and medium-sized investors

Increase the supply of top-level systems. Timely adjust and increase the relevant systems for the protection of the rights and interests of small and medium-sized investors, further clarify the rights and obligations of small and medium-sized investors, improve the economic compensation system, and strengthen the legal responsibility for the protection of the rights and interests of small and medium-sized investors.

Protect the right to know of small and medium-sized investors. Information disclosure is not only the main channel for investors to understand listed companies, but also an important basis for realizing the function of investment and financing. Information disclosure must be comprehensive, accurate and timely, and concise, easy to understand and practical. Establish a pre disclosure system for the reduction plan of restricted share holders, and relevant shareholders shall not transfer shares before disclosure. Strengthen the supervision of information disclosure of listed companies and strengthen the responsibilities and obligations of relevant market subjects. We should systematically study the institutional norms of fair access to information for small and medium-sized investors, and improve the accountability mechanism for violations of information disclosure.

Improve the voting and voting mechanism of shareholders of listed companies. Shareholders' voting methods and the effectiveness of voting results directly affect the enthusiasm of small and medium-sized investors to exercise their participation rights. It is necessary to study the classified voting mechanism with Chinese characteristics for small and medium-sized investors to exercise their right of participation. When the general meeting of shareholders considers major issues that may affect the interests of small and medium-sized investors, such as refinancing and profit distribution, we should pay attention to the voice of small and medium-sized investors. Explore the establishment and improvement of the solicitation voting system to facilitate the exercise of voting rights by small and medium-sized investors.

Improve the investment return mechanism. We should guide listed companies to actively repay investors. Guide the company to formulate differentiated dividend policies according to the plate, industry, listing years and development stage of listed companies, and explore and establish appropriate supporting institutional arrangements for companies with sustained and stable cash dividends. Establish a diversified investor return system, improve the share repurchase system, and guide listed companies to promise to carry out share repurchase when the share price is lower than the net assets. Enrich the dividend distribution methods, explore the dividend distribution of listed companies, the shareholders decide to choose new shares or cash, and launch the preferred stock system as soon as possible.

Improve the investor suitability system. Investor suitability management is not only an effective measure to protect small and medium-sized investors, but also an institutional arrangement widely used in domestic and foreign markets. At present, China's gem, the third board, stock index futures and margin trading have implemented the investor suitability system, but the system level is low and the binding force is not strong. The classification criteria between small and medium-sized investors and other investors shall be clarified according to investment objectives, asset amount, investment experience, financial status, risk preference, integrity records and other factors. We should implement the product risk classification system, fully disclose all kinds of information that may affect their rights and interests, establish professional norms and accountability mechanism for salespeople, and provide appropriate products or services to appropriate investors.

Enrich investment channels and products. All parties concerned in the capital market should establish the awareness of serving small and medium-sized investors. Develop specialized intermediaries to serve small and medium-sized investors. Encourage innovative development of products with low risk and relatively stable returns suitable for small and medium-sized investors. With the protection of small and medium-sized investors as the core, try out the mechanism of linking the management rate of public financial products with the product return.

Establish a diversified dispute resolution mechanism. We should further clarify the primary responsibility of market operators for complaint handling, improve the complaint handling mechanism, and disclose the handling process and handling situation according to law. Support small and medium-sized investors to negotiate with market operators to resolve disputes. Promote professional dispute mediation and arbitration, and provide free dispute mediation services for small and medium-sized investors. Enhance the legal binding force of mediation, establish and improve the docking mechanism between mediation, arbitration and litigation. Explore relevant institutional arrangements that will help small and medium-sized investors litigate according to law and broaden channels for safeguarding their rights.

We will improve the compensation system for small and medium-sized investors. Establish an advance compensation system and urge the subjects responsible for violations to take the initiative to compensate small and medium-sized investors. Guide various business entities in the market to establish independent investor relief mechanisms, set up special risk reserves, broaden the sources of compensation funds, and facilitate small and medium-sized investors to obtain compensation fully, timely and conveniently. Establish a delisting risk management and compensation system for listed companies to reduce possible losses caused by small and medium-sized investors.

Strengthen the education of small and medium-sized investors. We should clarify the responsibilities of regulatory departments, self regulatory organizations, market operators and other parties, give full play to the role of news media and networks, and enhance the awareness of rights and risk prevention of small and medium-sized investors. Small and medium-sized investors should also take the initiative to master investment knowledge and related skills, establish a rational investment awareness, do not blindly follow the trend and make frequent speculation, and improve their self-protection ability.

Protect the legitimate rights and interests of small and medium-sized investors throughout the supervision work

Resolutely investigate and deal with illegal acts such as fraudulent issuance, illegal disclosure, insider trading, market manipulation and rat warehouse, and increase the cost of violations

Securities and futures supervision shoulders the mission and responsibility of protecting small and medium-sized investors. In the face of the new situation and new requirements, we should fundamentally change our ideas, unify our understanding, and safeguard the legitimate rights and interests of small and medium-sized investors throughout the supervision work. Timely improve the supervision system and strictly implement laws and regulations. Comprehensively strengthen regulatory cooperation and form a joint force for protection. Improve the communication mechanism with small and medium-sized investors and respond to the demands of small and medium-sized investors in a timely manner. We will resolutely investigate and deal with illegal acts that seriously damage the interests of small and medium-sized investors, such as fraudulent issuance, illegal disclosure, insider trading, market manipulation and rat trading, and increase the cost of violations. Strengthen the effective connection between administrative law enforcement and criminal law enforcement, and improve the efficiency of investigating and dealing with securities and futures criminal cases. Establish a reward system for reporting illegal cases, smooth reporting channels, improve reporting inquiry and confidentiality measures, and effectively protect whistleblowers. Improve the assessment system and take the performance of the responsibility of safeguarding the legitimate rights and interests of small and medium-sized investors as an important basis to measure the effectiveness of supervision. Vigorously carry out the publicity of supervision and law enforcement, establish a punishment mechanism for benefiting from trustworthiness and breaking faith, and strengthen the awareness of integrity and law-abiding of market subjects.

The protection of the rights and interests of small and medium-sized investors is a systematic project involving the whole society. We should strengthen cooperation and cooperation with local governments and departments, establish a normalized contact and communication mechanism, strive to build a protection system of "legal protection, regulatory protection, self-discipline protection, market protection and self-protection", and promote the joint participation of all forces to form a joint force. Establish a database covering the integrity records of the whole market to realize inter ministerial information sharing. Listed companies and market operation institutions shall abide by various systems for safeguarding the rights and interests of small and medium-sized investors and advocate honest operation and equity culture. Establish an evaluation mechanism for the protection of the rights and interests of small and medium-sized investors, give full play to the role of social supervision, form a good atmosphere for the protection of small and medium-sized investors in the whole society, enable small and medium-sized investors to enjoy the dividends of the reform and development of the capital market, and enable the capital market to help realize the "Chinese dream".