CSRC to tighten regulations over financial system
China will step up its efforts to develop its commodity futures market and strengthen regulations for the country's financial markets, a top official with the China Securities Regulatory Commission (CSRC) said on Sunday.
China will "rapidly develop" a commodity futures market because the market plays a crucial role in setting commodity prices and reducing risks in the financial system, Fang Xinghai, vice chairman at the CSRC, said at a financial industry forum in Beijing, according to media reports.
Fang made similar comments just a few days earlier, saying that now is the time for China to establish a global price-setting center for commodities, which is necessary for the country to improve its financial system and establish a global financial center in Shanghai.
"There is no other country in the world that has such a great opportunity, and failing to seize such an opportunity would be a historic mistake," Fang said at the Shanghai Futures Exchange annual conference on Wednesday.
The global price-setting mechanism for most commodities has shifted to the futures market and away from being driven by producers and traders, according to a transcript of Fang's speech on the CSRC's website. There is no single price for a commodity at any moment but a range.
"As a major consumer [of commodities], we are certainly concerned about where the [price] falls within that range," Fang said. "If the futures market that sets commodity prices is in China, we will have more of an influence over prices."
But there will be fierce competition in establishing a global price-setting center in China, despite advantages in market scale and growth, Fang said, noting work needs to be done.
China needs to reform the system for commodities futures trading, and open the market to more foreign investment, while guiding domestic firms and financial institutions to "broadly participate" in the futures market, Fang said.
For Shanghai to become a global price-setting center, there must be "adequate and effective" regulations in place to ensure market order, Fang said, adding collaboration with overseas markets is also necessary.
Fang also suggested that tighter regulations for the overall financial market and crackdowns on insider trading, market manipulation and false information disclosure are under way.
"Financial security is an important component of national security, so preventing risks is the long-term goal of market regulations," Fang said.
The CSRC will focus on studying and evaluating market trends and hidden risks, cracking down on risks in sectors such as Internet financing, private funding and equity-based crowd-funding.
Wu Jinglian, a renowned economist, said Sunday at the same event that there are big gaps in China's market regulations.
Failure to disclose proper information has become rampant in the financial market, which puts investors at risk, Wu said, the China Securities Times reported on Sunday.
"But regulatory agencies haven't focused on a mandatory information disclosure system, and have instead focused on approvals," Wu said, noting reforms in all aspects of the financial system must go forward.
