SCIO briefing on the reform and development of the capital market

China Business Network:

Last year, you warned some institutional investors not to become “barbarians.” You also said that you will punish the "financial crocodiles" at the beginning of this year. I wonder who the “barbarians” and "financial crocodiles" are. Thanks.

Liu Shiyu:

First of all, the top priority of the CSRC is supervision. This is its clear and unshakable role. Through supervision, that is to say, through legal, comprehensive and strict supervision, we can maintain an open, fair and just market order. Without these principles of openness, fairness, and justness, there can be no protection for investors’ rights. Without an open, fair and just market order, there is no effective protection for small and medium investors’ legal rights.

Secondly, I have spent long time to investigate the different forms of chaotic behavior in the capital market after I came to the CSRC and I feel a sense of shock. I wanted to find some simple, proper and comprehensible words to cover this chaos I found. I did not create these word -- the “barbarian,” “demon,” “pests” and "financial crocodiles" you mentioned. These people’s behaviors usually take place under a cloak of legitimacy; however, they are hurting the legal rights of the small and medium investors. The function of the CSRC is supervision. Can we just sit idly by?

Third, the temptation of big money is a huge issue for the financial market. There is only a slight margin in approach that differentiates an angel and a devil. It is just half step away from the gap between a financier in capital market and a "financial crocodile." Any transaction in capital market is recorded, including the earliest transactions calculated by an abacus. With the application of modern technology, especially the use of big data and cloud computing, any behavior, which is illegal, harmful to the small and medium investors, and destructive to the market order, taken by any individual or any institutional investor at any time is recorded. We will continue to rely on these past and current records. I reiterate that institutional investors in the fund industry should not become “barbarians,” “demons” and “pests.” I said we will investigate the "financial crocodiles" who hurt the rights of small and medium investors, but what I said focuses on behavior. However, we cannot presume that this or that person is behind the behavior, because there is still a long way to go. We need to investigate various clues and analyze the data to find out who is responsible.

You asked me who are the “barbarians,” “demons,” “pests” and "financial crocodiles," if I told you, I would be prejudging my future investigation. Thanks.

Hu Kaihong:

That's all for today's press conference. Thank you.