BIZCHINA / Backgrounder
How China's stock exchanges operate?
(CRI)
Updated: 2006-03-17 16:05
Q: When was China's stock market established?
A: China's stock market "experiment" started 11 years ago when the first
stock market was set up in Shenzhen in 1989. In 1993, a second stock
market was set up in Shanghai. Since 1994, many Chinese companies have
also been listed in Hong Kong as "H" shares. Some of them have also been
listed in New York and Singapore.
Q: How do the two exchanges operate?
A: The Shanghai Stock Exchange (SSE) was founded on November 26th, 1990
and in operation on December 19th the same year. It is a
non-profit-making membership institution directly governed by the China
Securities Regulatory Commission(CSRC).
The SSE bases its development on the principle of "legislation,
supervision, self-regulation and standardization" to create a
transparent, open, safe and efficient marketplace.
The SSE endeavors to realize a variety of functions: providing
marketplace and facilities for the securities trading; formulating
business rules; accepting and arranging listings; organizing and
monitoring securities trading; regulating members and listed companies;
managing and disseminating market information.
After several years' operation, the SSE has become the most preeminent
stock market in Mainland China in terms of number of listed companies,
number of shares listed, total market value, tradable market value,
securities turnover in value, stock turnover in value and the T-bond
turnover in value. December 2004 ended with over 37.87 million investors
and 837 listed companies. The total market capitalization of SSE hit RMB
2.6 trillion. In 2004, Capital raised from SSE market surpassed RMB 45.7
billion. A large number of companies from key industries, infrastructure
and high-tech sectors have not only raised capital, but also improved
their operation mechanism through listing on Shanghai stock market.
The Shenzhen Stock Exchange (the SSE) is a mutualized organization that
provides a venue for securities trading under the authorization of the
China Securities Regulatory Commission (the CSRC).
A broad spectrum of market participants, including 500 plus listed
companies, 35 million institutional and individual investors and 200 or
so exchange members, create the market. Here buying and selling orders
are matched, in a fair, open and orderly market, through an automated
system to create the best possible prices based on price-time priority.
The SSE is characteristic of the entrepreneurial spirit of the southern
coastal city where it locates. Since its inception on 1st December 1990,
it has blossomed into a market with great competitive edges in the
country. Over the past 14 years, capital raised here amounted to an
equivalence of US$ 807 million trade on the SSE. In June 2004, the Small
& Medium Enterprises Board took off. This market, exclusive for small and
mid-caps, is a significant step toward phase-in launch of the New Market.
Under the principle of "Regulation, Innovation, Cultivation and
Services", the SSE is committed to pursuit of a multi-layer capital
market and making the SME Board home and engine for growth companies.
Q: What is the watchdog of the stock market?
A: To strength the centralized and unified management of the Chinese
stock market, the Securities Committee of the State Council and the China
Securities Regulatory Commission (CSRC) were formed in 1992. Among CSRC's
responsibilities include: formulating policies, laws and regulations
concerning securities and futures markets; overseeing issuing, trading,
custody and settlement of equity shares, bonds, investment funds;
supervising listing, trading and settlement of futures contracts, futures
exchanges, securities and futures firms.
(For more biz stories, please visit Industry Updates)
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