Securities firms urged to focus on real economy

China's securities industry should concentrate on better serving the real economy and further enhance compliance awareness and implementation so as to ensure the high-quality development of the capital market, a top regulator said on Saturday.

Li Chao, vice-chairman of the China Securities Regulatory Commission, the country's top securities watchdog, made the remark at the 30-year celebration forum for China's securities industry.

The capital market plays a key role in optimizing resources allocation and facilitating the high-quality circulation of capital and technology within the real economy. As the key connection between the real economy and the capital market, the securities industry should adhere to the rule of serving the real economy. Doing so can provide similar impetus for the development of the securities industry, Li said.

For three decades, China's securities industry has played a key role in a number of national strategies such as opening-up, poverty alleviation and reform of State-owned enterprises. Higher requirements have been imposed on the securities industry as the country enters a new development paradigm, under which a registration-based initial public offering mechanism should be implemented on all boards of the A-share market and direct financing should play a bigger role, Li added.

The securities industry can seek sound development only when compliance and risk control are emphasized, which is proved by the experiences of the past 30 years, he said.

The commission issued a guidance on July 7 aiming to improve the investment banking businesses of securities companies. In early August, it also issued an action plan to help improve the governance of securities, futures and fund companies.

Companies should improve their weak links and eliminate loopholes in their governance as this is the only way to further consolidate the foundation of the securities industry, Li said.

In addition, participants in the securities industry should accelerate their transformation by making themselves more professional and focusing on active management. Investment banks can make progress by improving their service quality on sponsoring, pricing and underwriting, Li added.

While the country's top regulator has called for better governance and is expecting more professionalism in the capital market, a large number of actively managed mutual fund products, which have played a bigger role in the market since the beginning of last year, have restricted large subscriptions to better balance investment strategies and the scale of the funds.

As of Friday, more than 3,200 mutual fund products had suspended or halted large subscriptions, according to market tracker Wind Info. In August, at least 400 funds have suspended such subscriptions.

The cautious measures are to avoid dilution of investors' profits amid large amounts of capital inflow. Investors' interests can be better protected when a fund's scale is under control, said Yang Delong, executive general manager of Shenzhen-based First Seafront Fund.