When the topic of a market for small and medium sized enterprises at Shenzhen Stock exchange is very hot, Shang Fulin, Chairman of China Securities Regulatory Commission, picked up the topic again at the Beijing International Financial Forum on May 19. He vowed to promote the board of enterprises, so-called second board, in steps on the basis of developing the main board. In the meantime, he stressed to achieve coordinative development of financial market through financial innovation.

He clarified the aims of the enterprise board as offering more financing chanell for small and medium sized enterprises with growth potential and hi-tech content, giving a full play to industrial upgrading and improving the vigor and competitiveness of China's economy.

He illustrated how the systematic reform would be approached in the capital market. First, keep on improving the governance structure of listed companies in conjunction with the financing system reform and support the steady growth and restructuring of the national economy.

Second, promote balanced development of financial markets in conjunction with the financing innovation and constantly diversify financial instruments.

Thirdly, perfect the investors composition with focus on nurturing institutional investors.

Fourthly, gradually establish a multi-layer market system and enhance the competitiveness of the national economy by improving resource allocation efficiency.

Much is expected on financial innovation amid the mounting pressure of interest rates risks. Shang recognized China's capital market was not diversified in terms of products, lacking derivative products which are indispensable for any portfolio. This makes financial institutions and clients exposed to bigger risks of interest rates.

Shang vowed to create a market-oriented product innovation system. At present, the securities watchdog will scale up the corporate bond issuance in line with the demand of investors.

Shang also unveiled their plan to build a financial market featured with transparency, efficiency, interconnection and safety. For capital market, Shang decided to aggregate the efforts on building a "multi-layered capital market and developing the bond market, as well as consolidate stock trading, registration and settlement resources, in order to gradually set up an integrated securities market".

Shang also set tasks for the composition of listed companies: pooling quality companies in the capital market which in turn help the further growth of those market leaders.

By People's Daily Online