1、 Introduction
The construction and development of the capital market is a major achievement of China's reform and opening up. Since the establishment of the Shanghai Stock Exchange in 1990, after more than 30 years of development, the basic institutional system of the capital market has become increasingly sound. A multi-level capital market system dominated by the main board, the gem, the science and innovation board and the new third board has been basically established, and the scale of the capital market ranks second in the world. The capital market has played an irreplaceable role in optimizing the allocation of resources, promoting economic development, optimizing and upgrading the industrial structure, and standardizing the modern enterprise system, laying a solid foundation for further reform, innovation, and healthy development. However, compared with the mature capital market and the requirements of China to achieve high-quality development, the function of China's capital market has not been fully brought into play. First, it did not play the function of national economic barometer. Since the 21st century, China's GDP has increased from more than 10 trillion yuan to one billion yuan in 2020, and the GDP has increased nearly nine times in 20 years. However, from the perspective of the Shanghai Stock Exchange Index, the Shanghai Stock Exchange index was between 2000 and 3000 points for most of 2000 and 2020. If the time range of the investigation is from 2008 to 2020, the Shanghai stock index will fall from the highest point of more than 6000 in 2008 to the highest point of more than 3000 in 2020, and the stock market situation is inconsistent with the economic development situation. Second, the inclusive financial function is seriously lacking. The capital market should enable investors to share the fruits of economic development and enhance investors' sense of gain in economic development. From 1900 to 2017, the annualized rate of return of the U.S. stock market was 10%, and the average annualized rate of return of the stock market in developed countries was 8.4%. Since the 21st century, the average annualized return of stock markets in emerging market countries has been 7.4%. From 2007 to 2020, there were 200 stocks with a share price increase of more than 10 times and 1000 stocks with a share price increase of more than 5 times. Due to the drag of junk stocks, on the whole, there was almost no income, and even as high as 70% of retail investors suffered serious losses. Third, the function of leading the optimal allocation of social resources is weakened. The core function of the capital market is to lead the optimal allocation of various social resources through the optimal allocation of capital. To examine the degree of realization of this function, it is fundamentally necessary to see whether the development quality of listed companies is highly positively correlated with the rise of stock prices. Only with a high degree of positive correlation can we guide social capital to gather in high-quality companies. In terms of specific methods, it is mainly to investigate and evaluate the information efficiency of the capital market, that is, whether the information transparency, transmission efficiency and stock price can fully and quickly respond to the information in the market. The speed and degree of its response is the embodiment of the efficiency of market allocation. China's stock price is generally out of line with economic development, and there is a strong speculative atmosphere. Some companies that create public opinion and rub hot spots are wantonly circling money, while companies committed to innovation and high-quality development are ignored.
2、 Analysis of the influence mechanism of basic system on the function of capital market
The imperfect basic institutional framework of the capital market makes it difficult for the market operation mechanism to play a full and effective role, which is the main reason for the weakening of the functionality of the capital market. Capital market is a special form of market economy, and all market subjects need to operate within the framework of institutional rules. Various rules and systems have a significant impact on the quality and behavior of market subjects and play a decisive role in the role of market mechanism. Entry rules, exit rules and competition rules are the three main aspects of the basic institutional system of market economy.
（1） The basic system of market entry and the function of capital market
The market entry rules of the capital market are commonly referred to as the Listing Rules of enterprises. The company's initial public offering of shares, with strict conditions and complex procedures, is the most regulated link by law. Administrative barriers are too high, making listed companies scarce resources. There has been a long-term "three highs" phenomenon of high issue price, high P / E ratio and superb raising of new shares. The basic system of market entry mainly has the following three aspects:
1. Weakening of legal means and excessive administrative intervention
In the basic institutional framework of the capital market, the securities law is the most basic and fundamental system. In addition, there are many administrative regulations, departmental rules and normative documents. In particular, some normative documents are formulated for specific problems in a certain period, but they have the effect of the law as soon as they are issued. As long as there is no clear opinion of repeal, they will always be effective. According to these normative documents, the competent department shall provide window guidance. For example, the securities law stipulates that the financial index for the listing of enterprises on the main board is to make profits for three consecutive years and the cumulative net profit is not less than 30million yuan, and the financial index for the listing of enterprises on the gem is to make profits for two consecutive years and the cumulative net profit is not less than 10million yuan. However, under the guidance of the window, the actual required financial indicators are much higher than the provisions of the securities law. When listed on the main board, the net profit of the previous accounting year should generally reach 100million yuan; Listed on the gem, the net profit of the previous fiscal year is generally up to 80million yuan. Even if they reach a higher standard, they have to wait in line, sometimes for as long as 3 or 5 years. Administrative market supervision often adopts a "one size fits all" approach. For example, due to the speculation of stock prices by individual catering enterprises such as xiangeqing, the capital market gate is closed to the entire catering enterprises, forcing leading enterprises such as Haidilao to list overseas. The excessive administrative intervention is also reflected in the excessive discretion. For example, the standards and conditions for the audit of enterprise IPO in terms of business independence, asset integrity, related party transactions and so on are not specific and clear, resulting in a great deal of discretion for the competent authorities.
2. Overemphasize the scale and profit indicators, and pay insufficient attention to the sustainable development ability of enterprises
For the main board and gem, the rationality of financial indicators and the sustainability of profitability have one vote veto on whether enterprises can be listed. This leads to some companies with great development potential and strong innovation ability unable to be listed and financed at the critical stage of enterprise development. From 2000 to 2019, among China's leading enterprises listed abroad, 83 enterprises met the financial conditions of IPO on the main board and 106 enterprises met the financial conditions of IPO on the gem, accounting for 58% and 74% of the total number of overseas listed enterprises in China in the same period, respectively. If the financial conditions are guided by the window, this proportion is less than 30%. Due to excessive attention to profit indicators, many "unicorn" enterprises in China cannot be listed in China, resulting in enterprises making profits in China but bringing rich returns to foreign investors through listing in Hong Kong or abroad. For example, Tencent holdings was listed in Hong Kong in 2004, with an issue price of HK $3.7 per share. Its current share price has exceeded HK $400 per share. By the end of 2020, its cumulative dividend has reached HK $18.4 billion. If it is held from issuance to the end of 2020, the cumulative income will exceed 500 times.
3. The issuance of new shares is controlled by the government and cannot reflect the market supply and demand
The issuance of new shares, whether initial or additional, is controlled by the government through administrative means, which leads to the disconnection between the issuance of new shares and the market. In the mature capital markets in Europe and the United States, during the bull market, it is relatively easy to issue new shares, and the enthusiasm of enterprises to issue new shares is high. The expansion of effective market supply can play a role in cooling the stock market. In China, the excessive administrative intervention in the issuance of new shares makes it difficult for the market mechanism to function effectively.
（2） The basic system of market exit and the function of capital market for most tangible products, the exit of enterprises or products can be completed spontaneously through the market mechanism. Due to the particularity of the stock, a representative product of the capital market, its value judgment depends on many factors such as professional ability and investment experience, and there are many situations such as information asymmetry, fraud and speculation. In order to protect the interests of investors, especially small and medium-sized investors, and consolidate the foundation of the development of the capital market, the exit mechanism of the capital market must play a role together with the "visible hand" of the government and the "invisible hand" of the market. Observing the mature capital market, we can see that there is little difference between the number of listed enterprises and the number of delisted enterprises every year, and the number of listed companies remains balanced on the whole. Take the New York Stock Exchange as an example, there are 200 to 300 newly listed companies and 200 to 300 delisted companies every year, and the number of listed companies is stable at about 3000. There are three types of delisting conditions for the main board and gem stipulated in the securities law of China, namely, illegal and illegal, stock trading and finance. The financial indicators are mainly negative net profit, negative net assets and annual operating income less than 10million yuan. From past experience, it is the indicator of negative net profit that can really play a role. However, this indicator gives inferior companies a lot of room for manoeuvre and operation. First of all, enterprises need to have negative net profits for four consecutive years to be forced to delist, which provides manipulation time for low-quality companies; Secondly, companies facing delisting risk are easy to artificially create a situation of "two years of loss and one year of profit" through impairment provision, depreciation provision and even fictitious income, so as to avoid delisting. This has led to a situation of "strict entry and difficult exit" in China's capital market, and a large number of poor quality companies flooded the market. In the case of difficult listing, these so-called "shells" are valuable instead. This is an important reason for the distortion of resource allocation behavior in the capital market.
（3） The basic system of market competition and the function of capital market
The fundamental reason for the weakening and lack of functionality of the capital market is that market mechanisms such as price, supply and demand, and competition have not played a good role. Competition is the soul of the market, and the competition mechanism is the basis for the price mechanism and the supply and demand mechanism to play a role. However, competition has both positive and negative aspects. The side effects of competition are not only obvious, but sometimes even devastating. Therefore, the mature capital market not only encourages full competition, but also regulates and restricts the competitive behavior.
The degree of integration between China's capital market and the international capital market is constantly improving, and the progress of computer and telecommunication technology has further strengthened this trend. The experience of developed countries has fully shown that competition is the fundamental driving force for the development of capital markets and the source of maintaining the vitality of capital markets. Due to the invisibility, inexperience and high risk of the products sold in the capital market, it is more necessary to regulate and restrict the competition in the capital market, and various rules are more complex. It is also more difficult to balance the positive role of competition and resolving the negative role of competition. From the perspective of protecting public interests and the interests of small and medium-sized investors, China has formulated and issued a series of systems to regulate and restrict competition, but from the actual operation, some systems have not only hindered competition, but also failed to protect investors.
1. The rationality of economic man caused by the lack of institutional investors
The "invisible hand" of the market can guide the optimal allocation of social resources, which depends on the assumption of economic rationality, that is, the market subjects are rational, and their behaviors meet the principle of maximizing personal interests. Therefore, individual rationality can be integrated into collective rationality. The use value and intrinsic value of stocks are highly separated, and their intrinsic value depends on the cash flow creation ability of the enterprises they depend on in the future. Retail investors in the capital market are often irrational. To realize the rationality of the demand side of the capital market, we must vigorously cultivate institutional investors. However, China's current laws and regulations restrict the entry of pension funds, enterprise annuities and insurance funds into the market, resulting in institutional investors always in a weak position. It is the lack of rationality of investors that makes the government formulate a series of systems to hinder competition from protecting the interests of investors. For example, China's IPO implementation of the approval system is to pass strict examination and approval to reject low-quality companies.
2. The lack of short selling mechanism weakens the function of capital market value discovery. The experience of mature capital markets shows that short selling mechanism not only helps to squeeze out the price foam, but also helps to enhance the function of capital market price discovery. If the stock price seriously deviates from its intrinsic value, the short selling mechanism will help to restore it to a reasonable level. An important role of the short selling mechanism is to improve the transmission efficiency of negative market information, quickly transmit negative information to the stock price, and enhance the effectiveness of the capital market. From the specific situation of China's capital market, there are three short selling methods in the A-share market, namely, margin trading, stock index futures, and ETF options. Due to unscientific system design and too many restrictive conditions, these three short selling mechanisms have not played their due role. In 2019, the balance of securities lending in Shanghai and Shenzhen markets was less than 10billion yuan, accounting for about 1% of the financing balance in Shanghai and Shenzhen markets. Stock index futures and ETF options have basically not played a role due to many restrictions and few trading varieties.
3. Insufficient protection for investors
First, the crackdown on unfair competition is insufficient. The prominent reflection of unfair competition behavior on the supply side is that the information disclosure is incomplete, inaccurate, untimely and incomprehensible. Fraudulent issuance and financial fraud are the two main forms of expression; Its outstanding reflection on the demand side is insider trading and price manipulation. The revision of the securities law has greatly increased the punishment for unfair competition on the supply side, increased the maximum fine for illegal information disclosure from 600000 yuan to 10million yuan, and increased the maximum fine for fraudulent issuance from 5% of the raised funds to 100%. However, the identification of unfair competition on the demand side is not clear enough, and the deterrent effect of punishment is not enough. For example, there is no clear and quantitative standard for market manipulation, and there is great randomness in the specific investigation. Second, the role of the price limit system in protecting small and medium-sized investors is not obvious. In the secondary market of the science and technology innovation board, the proportion of rise and fall is more relaxed, but the rise and fall restrictions still exist. The original intention of establishing this system is to protect small and medium-sized investors, but from the actual operation, it is counterproductive. Using the trading rules of pre order bidding, dealers can pull the limit with low risk and low cost. In the continuous trading limit, because retail investors cannot participate in the pre market bidding, only when the banker pulls the stock price to a high level, can they follow the trend and enter the market, and the banker just exits at this time. Mature capital markets have no daily limit or daily limit system. Third, the litigation cost of small and medium-sized investors is too high. China has not yet established a class action system, and the deterrence of securities fraud and other illegal acts is not enough. At present and for some time to come, retail investors will still be the main investors in China's capital market. Fraud often involves tens of thousands of investors, and the joint litigation system or representative litigation system is difficult to play a role because of the high cost of coordination and organization. In this case, the investigation and prosecution of illegal acts mainly rely on administrative supervision, and civil prosecution is in vain, which is detrimental to the protection of small and medium-sized investors.
3、 Analysis of the influence mechanism of market players on the function of capital market
Whether it is market mechanism or institutional rules, they must ultimately act on market players. Therefore, whether the market participants can make a rational response to the signals transmitted by the market is related to the success or failure of the market mechanism and institutional rules, and plays a decisive role in the functioning of the capital market. The main body of the capital market is mainly composed of investors, listed companies and intermediaries. For a long time, contrary to the market situation of long bull and slow bull in developed countries, China's A-share market has a strong speculative atmosphere, which is manifested in the short-term bull rush, the technical analysis is highly sought after, the short-term speculation is popular, the stock price and the intrinsic value of listed companies are gradually drifting away, and it is not uncommon for bad money to expel good money at the financing end. On the one hand, small and medium-sized investors suffered heavy losses, forming a unique "721" phenomenon, that is, among retail investors, 70% lost money, 20% broke even, and only 10% made profits. The concept of value investment requires investors and companies to grow together. In the capital market of short-term and urgent bull, value investment will inevitably give way to speculation. On the other hand, in the short bull and eager bull capital market, there is no way to optimize the allocation of resources. Companies that can tell stories and rub hot spots are wantonly circling money, while companies that firmly focus on innovation and industry are ignored. The high volatility of the capital market is the result of the superposition of various factors, and the low quality of market participants is the decisive factor.
（1） Investor structure and capital market function
Looking at the global mature capital markets, all of them are professional and large-scale institutional investors. Take the three major stock exchanges in the United States as an example, the average daily trading volume of retail investors accounts for only about 10% of the total trading volume. In China, on the contrary, retail investors occupy a dominant position. Taking the A-share market as an example, 134million natural person investors, accounting for 99.75% of the total investors. Non natural person investors were 338200, accounting for less than 1%. Among all investors, 75% have total assets of less than 500000 yuan. Although the stocks held by natural persons account for only 25% of the total stock market value, they account for 80% of the stock market trading volume. From the perspective of a few institutional investors, cemetery funds and private equity funds are the main body of institutional investors. Among the more than 30 trillion cemetery funds and private equity funds, less than 20% enter the stock market. By the end of 2020, the stock market value of Shenzhen alone had reached 35.2 trillion. Cemeteries and private equity funds entering the stock market account for less than half of the market value of Shenzhen. The investment philosophy and basic logic of retail investors and institutional investors are completely different. Institutional investors often follow the concept of value investment, buy high-quality company stocks at a lower price and hold them for a long time. Retail investors often chase hot spots with speculative psychology, and in specific investment behavior, they often show short-term speculation, chasing up and killing down. The investment rationality required by the capital market not only requires a considerable degree of professional ability, but also needs to overcome the weakness of human nature. Therefore, the large number of retail investors dominated by natural persons will inevitably lead to a strong speculative atmosphere in the capital market.
（2） The quality of listed companies and the function of capital market
Listed companies are the cornerstone of the capital market. They should be the best enterprise group in a country and the source of the intrinsic value of stocks. The quality problems of Listed Companies in China are mainly manifested in the following aspects.
1. A large number of inferior companies flooded the market
In the A-share market, there are 233 zombie enterprises in the narrow sense and 400 zombie enterprises in the broad sense. Some enterprises have no investment value. By creating hot spots, they collude with institutional investors to drive up share prices and wantonly circle money. Some enterprises attach importance to financing rather than return, and even do not hesitate to adopt the means of high premium mergers and acquisitions to implement the so-called value management. In recent years, some high premium mergers and acquisitions have led to the explosion of goodwill, which is the result of some enterprises creating hot spots and implementing value management.
2. The overall profitability of listed companies is in a state of wandering. The two indicators of earnings per share and return on net assets from 2005 to 2018 can evaluate the profitability of listed companies (data are from Wande all A-share index and Shanghai Shenzhen 300 index. Wande all A-share index covers all A-shares in Shanghai and Shenzhen, and Shanghai and Shenzhen 300 index is composed of 300 stocks with large market capitalization and trading volume in Shanghai and Shenzhen). According to Wande all A-share index, from 2005 to 2007, earnings per share increased from 0.21 yuan to 0.42 yuan, reaching a peak of 0.52 yuan in 2011. In the seven years from 2012 to 2018, earnings per share basically stabilized at around 0.5 yuan. In the past 13 years, earnings per share increased by only 2.38% annually. The trend of the CSI 300 index is completely consistent with that of the wandequan index. From 2005 to 2018, earnings per share increased from 0.34 yuan to 0.77 yuan. In the past 13 years, earnings per share increased by only 3.3% annually. According to Wande all A-share index, from 2005 to 2018, the return on net assets increased from 8% to 9.7%. According to the Shanghai Shenzhen 300 index, from 2005 to 2018, the return on net assets decreased from 12.2% to 11.8%.
3. The transparency of listed companies is not high
There are still many problems in the quantity and quality of information disclosure of listed companies, the rule system aiming at improving transparency is still imperfect, and the industry information disclosure standards and disclosure contents guided by the needs of investors have no institutional norms, so the disciplinary measures to urge listed companies to effectively perform their information disclosure obligations are not strong enough. In recent years, financial fraud, internal control failure and other cases have occurred locally, and individual listed companies have lost their integrity. Hidden problems have begun to emerge under the tightening economic environment and increased supervision. Moreover, some listed companies' controlling shareholders, actual controllers and directors, supervisors and senior executives lost the bottom line, broke the red line, colluded with intermediaries, and deceived investors through false records, major omissions and other means.
4. Insufficient incentives and constraints on some major behaviors of listed companies and their shareholders
First, the cash dividends of listed companies are too low. The lack of cash dividends of listed companies is an important reason for the strong speculative atmosphere in the capital market and the difficulty in implementing the value investment concept. China's "Securities Law" only stipulates that for companies applying for additional issuance or allotment of shares, the accumulated profits distributed in cash in the last three years shall not be less than 30% of the annual distributable profits achieved in the last three years, that is, the annual cash dividends in the last three years shall not be less than 10% of the distributable profits. As there are basically no restrictions or incentives on cash dividends of listed companies, listed companies rarely pay cash dividends, and a large number of listed companies do not pay cash dividends throughout the year. Second, the risk of equity pledge of listed companies is large. The proportion of major shareholders' equity pledge is too high. By the end of 2020, 178 listed companies had the largest shareholder's equity pledge proportion of 80%, and the market balance of equity pledge was as high as 1.6 trillion yuan. Once the stock market is depressed, the risk will be transferred from the capital market to the bank. At the same time, the compulsory liquidation of pledged equity will make the already depressed stock market worse. Third, the restrictions on high-level cash out of major shareholders are not strong. In China, large shareholders' high-level cash out has spawned a series of illegal transactions, causing heavy losses to retail investors. In recent years, some major shareholders of listed companies have cashed out billions or even tens of billions of yuan at a high level, and transferred the huge amount of funds obtained from these cashouts overseas. Fourth, there are too many restrictions on share repurchases, mergers and acquisitions of listed companies. In the mature capital market, in order to maintain the stability of the stock price or maintain the rising momentum of the stock price, listed companies will buy back a large number of their own shares and cancel them, which is the common practice of building a sustained slow Bull Stock Market in the mature capital market. China's "company law" has set many obstacles for listed companies to repurchase and cancel their shares, resulting in many listed companies whose share prices fall below net assets unable to carry out share repurchases. M & A is an important way for listed companies to become bigger and stronger. According to the provisions of the securities law, China strictly examines and approves the acquisition and major asset restructuring of listed companies. The assets acquired by listed companies reach 50% of the previous year's Listed Companies in any of the three aspects of scale, operating income and net profit, which are considered as major asset restructuring. The difficulty and complexity of examination and approval are similar to that of IPO, It greatly reduces the efficiency of mergers and acquisitions of listed companies.
（3） The quality of social intermediary institutions and the function of capital market
Investment banks are the most critical and core intermediary institutions in the capital market. They are the backbone to promote the healthy development of the capital market. They are not only the intermediary for the listing of enterprises and investors' investment, but also an important regulatory force. In order to enhance the competitiveness of their capital markets, Britain and the United States have liberalized mixed operations, and investment banks and commercial banks have been integrated. Even in countries such as Japan and Germany, which mainly rely on indirect financing, investment banks such as Nomura Securities and Deutsche Bank are still the strongest. At present, China has a number of banks and insurance companies listed in the world's top 500, but there is no securities company listed in the world's top 500. An important factor restricting the development of securities companies in China is that securities companies do not have the right to manage customer deposits. China's current law stipulates that the customer margin of securities companies must be entrusted to a third party. At present, China Securities Depository and Clearing Corporation is fully capable of monitoring and recording every securities transaction in real time, and the third-party custody system to prevent the misappropriation of customer deposits has lost its value.
4、 Countermeasures and suggestions for strengthening the function of China's capital market
The root cause of the weakening of the function of the capital market is the low quality of the market participants and the imperfect basic system. To solve the functional weakening of the capital market, we must adhere to the problem orientation, not only fully learn from the experience and practices of mature capital markets, but also based on national conditions and reflect Chinese characteristics. The core is to correctly handle the relationship between the government and the market. The key is that the boundary of government behavior should be clear, the means should be standardized, and the discretion should be compressed.
（1） Improve the quality of market players and consolidate the cornerstone of capital market development
Closely focus on the three key subjects of investors, listed companies and investment banks, aim at the key factors restricting the development of these three subjects, and take targeted measures in combination with China's national conditions.
1. Vigorously develop institutional investors and optimize the structure of investors. The scale of China's insurance assets is nearly 20 trillion yuan, accounting for about 15% of GDP. It is not only huge, but also has a lot of room for development. China's enterprise annuity is nearly 2trillion yuan, less than 2% of GDP. At present, China's enterprise annuity mainly comes from large enterprises. Policies such as allowing enterprise annuity income tax to be disbursed before tax or deducting personal income tax can mobilize the enthusiasm of small and medium-sized enterprises to set up enterprise annuity and leverage a larger scale of enterprise annuity. Therefore, to develop and expand insurance funds and enterprise annuity and enable them to enter the stock market is equivalent to opening the source of water for the development of institutional investors.
2. Improve the quality of listed companies and investment banks
To improve the quality of listed companies, the foundation is to control the entrance and smooth the export, and the fundamental guarantee is to increase the punishment for violations. The following measures can be taken to support listed companies to become bigger and stronger: first, support mergers and acquisitions of listed companies. The supervision of mergers and acquisitions of listed companies can refer to the practice of the stock issuance registration system to clarify the negative list of disapprovals. As long as there is no situation listed in the negative list, it will be approved quickly. Second, establish a dividend system for listed companies. Increase the proportion of cash dividends required by refinancing of Listed Companies in distributable profits. If it is lower than this proportion, it is not allowed to allot shares or issue additional shares. Mandatory delisting will be carried out for listed companies that have made continuous profits within a certain number of years but whose cash dividends are lower than a certain proportion of distributable profits. Establish a tax deduction policy for cash dividends of listed companies, allowing a certain proportion of cash dividends to deduct income tax or value-added tax. Third, eliminate the institutional obstacles for listed companies to carry out share repurchase and cancellation. China's "company law" stipulates that a company can buy back its shares only when it reduces its registered capital or merges with other companies that hold its shares. However, the company needs to notify all creditors to reduce its registered capital, and all creditors have the right to require the company to repay its debts in advance. Such provisions will make it difficult to repurchase shares for the purpose of maintaining or increasing the share price, and share repurchases for the purpose of maintaining or increasing the share price should be allowed. Fourth, prevent and limit large shareholders' high-level reduction and cash out and high proportion pledge financing. Referring to the practice that major shareholders need to disclose information in advance to increase their holdings, it is required that major shareholders holding a certain proportion of shares publicly disclose their holdings reduction information at a certain time before reducing their holdings. At the same time, the tax rate on the income from asset transfer formed by their holdings reduction will be increased. At the same time, it stipulates the upper limit of the equity pledge proportion of major shareholders, and stipulates that a certain proportion of the equity pledge income should be used for listed companies. Fifth, develop and expand investment banks. Referring to international practice, the management right of customer margin is handed back to securities companies, which can attract investors, expand securities investment funds, solve the problem of competitive homogeneity, and provide diversified services for customers.
（2） Smooth the access to and exit from the capital market, and gradually deepen the reform of the registration system
The establishment and improvement of the stock issuance registration system must be closely combined with the establishment and improvement of the delisting mechanism of listed companies, or it will lead to the excessive number of listed companies, the good and bad, and the overall quality decline. Moreover, the success of the registration system reform also depends on the overall environment of the capital market, which requires other supporting measures to follow up synchronously.
1. Accurately grasp the essential connotation and core essence of the registration system
In order not to make the registration system become the approval system and approval system in disguise, we must clarify the essential connotation and core meaning of the registration system. There is no fixed model for the registration system in various countries, but one thing is the same, which is to try to improve the marketization of stock listing and issuance. Therefore, the essential connotation of the registration system is to improve the degree of marketization and minimize unnecessary administrative intervention. Starting from this essential connotation, reviewing and summarizing the path of China's registration system reform, drawing on the experience of mature capital markets, and promoting the registration system reform, we should grasp the following four core meanings: first, the diversification of financial standards. China implemented the registration system reform in the science and technology innovation board and the gem in 2018 and 2019 respectively. Compared with the previous approval system, the most important difference is the diversification of financial standards for listing, which has changed from focusing only on enterprise size and sustainable profitability to paying more attention to the sustainable operation ability of enterprises. The gem has set three sets of enterprise market value and financial standards, and the science and innovation board has set five sets of enterprise market value and financial standards. For high-value enterprises, even if they lose money, they can enter the capital market. The second is to standardize the audit work. From the perspective of the registration system reform of the gem and the sci-tech innovation board, the audit work of the exchange has become increasingly standardized. The audit work is completely based on the laws and regulations issued, changing the previous practice of randomly improving financial indicators through window guidance and other means.
At the same time, the total amount control has been relaxed, the audit process has been accelerated, the audit cycle has been shortened, and the problem of waiting in line for a long time has been significantly alleviated. For example, the gem has implemented the registration system reform for only one year, and 727 issuance applications have been accepted, of which 182 have successfully registered on the gem, and a number of high-quality enterprises such as Maipu medicine and Leilei Weili have successfully listed according to the second set of standards. In the future, the audit work should be further standardized, the window guidance and total amount control should be completely eliminated, and the enterprises that meet the listing conditions must be registered within the time specified by laws and regulations. Third, non quantitative standards should be clarified. Among the various standards for the listing of enterprises, except the market value and financial indicators can be quantified, other standards are difficult to quantify. To implement the registration system, the discretion of the audit institution must be reduced as much as possible. Therefore, the unquantifiable standards such as the norms of financial management, the sound internal control system, the integrity of assets, and the independence of personnel and financial institutions must be clearly identified, which should become an important part of further deepening the reform of the registration system. The fourth is the intermediary of audit work. At present, a large number of audit work is undertaken by the audit committee, stock exchange and Securities Regulatory Commission composed of experts, which is easy to turn the registration system into an approval system in disguise. In order to improve the marketization of listing audit, the audit work should be handed over to market intermediary organizations as far as possible. For example, as long as a qualified accounting firm issues an unqualified audit report and an unqualified internal control system assurance report, it can be recognized that the enterprise's financial management norms and internal control system are sound. The examination and determination of standards such as integrity of assets and independence of personnel and financial institutions should also be handed over to the corresponding market intermediary organizations.
2. Establish a market-oriented and normalized exit mechanism at the same time
The registration system and withdrawal mechanism are equivalent to the inlet and outlet of the reservoir. If the inlet is unblocked and the outlet is blocked, the general balance of water level and the cleanness of water quality cannot be maintained, and the reservoir will have no vitality. Paper format is the writing standard and style requirements when writing a paper. The reform of the registration system of the science and technology innovation board and the gem is also carried out in accordance with this idea. For example, the science and technology innovation board has set three delisting indicators, namely, financial indicators, transaction indicators and regulatory indicators. If the net profit of the listed company in the latest fiscal year is negative and the operating income is less than 100million yuan, or the net assets of the enterprise at the end of the latest fiscal year are negative, the enterprise will immediately delist, changing the previous provisions of delisting only after losing money for four consecutive years or having negative net assets at the end of two consecutive years. The delisting system is more stringent and the delisting channel is more unblocked. However, since the supporting system has not been established accordingly, the construction of the delisting mechanism of the main board market cannot be completed in one step, otherwise, a large number of enterprise delisting will cause heavy losses to investors and panic. In the process of gradually improving the supporting system, the compulsory delisting time with negative net profit can be gradually shortened from 4 years to 1 year; After the supporting system is relatively perfect, the compulsory delisting time with negative net assets and operating income less than 10million yuan will be directly changed from two years to one year.
3. Synchronously establish and improve supporting systems
Implementing the reform of registration system is a systematic project. The continuous deepening of the reform of the registration system requires the continuous improvement of the overall environment of the capital market. To improve the overall environment of the capital market, we need to start from the following aspects: first, improve the rationality of investors. The purpose and starting point of implementing the approval system is to prevent fraudulent issuance through government examination and control, so as to protect the interests of small and medium-sized investors. Therefore, by vigorously cultivating and developing institutional investors, the government can safely hand over the audit power to the market. The second is to compact the responsibility of intermediary institutions. To implement the registration system, we must hand over more audit functions to intermediary institutions, and we must establish various systems such as intermediary institutions' qualification recognition, code of conduct, punishment for violations of laws and regulations, etc. Third, strengthen investor protection. With the implementation of the registration system, listing and delisting have become relatively easy. Various investor protection systems must be kept up in time. We should pay close attention to the establishment of delisting repurchase and insurance systems, and group litigation systems. At the same time, we should strengthen the investigation and punishment of illegal acts of listed companies.
（3） Remove institutional barriers and encourage full competition
In view of the factors restricting benign competition, in order to encourage market competition, we should focus on the following aspects to establish and improve various systems: first, we should severely crack down on all kinds of illegal acts. Paper format is the writing standard and style requirements when writing a paper. In view of the behaviors that seriously affect the fair competition in the capital market, we should study them one by one, define them clearly, revise and improve laws and regulations in time, and intensify the crackdown. In view of the specific situation of China's capital market, it is particularly necessary to strengthen the supervision of major shareholders of listed companies, and severely crack down on the collusion between major shareholders of listed companies and institutional investors to achieve a large proportion of high-level cash out, and the collusion between listed companies and intermediaries to implement fraudulent Issuance and financial fraud. Second, establish and improve the short selling mechanism. Open the scope of stocks that can be financed, and expand the source of securities. On the basis of establishing and improving the margin trading system, we will liberalize the trading restrictions of stock index futures, launch more varieties of ETF options, and gradually enrich short selling tools. The third is to abolish the price limit system and avoid major shareholders from using the price limit in the reduction or refinancing activities to conspire to dominate and manipulate the market.