Dialogue With Xie Geng, Chairman Of The National Stock Transfer Company: Smooth The Organic Connection Of Multi-Level Capital Market And Better Serve The Innovation And Development Of Small And Medium-Sized Enterprises

"China's multi-level capital market is not the accumulation from small to large, but each has its own positioning. Under their respective positioning, what we need to do is to give more choices to market players. "

On January 16, 2013, the national small and medium-sized enterprise share transfer system (hereinafter referred to as the "new third board") was officially opened for operation, and the third national securities exchange in China set sail. This has also become a landmark event in the 30 years of development of China's capital market.

In the past eight years, the new third board market has focused on the original mission of serving innovative, entrepreneurial and growing small and medium-sized enterprises, completed a series of system construction and reform and innovation, and initially explored a path for capital market to serve small and medium-sized enterprises.

On the occasion of the 30 years' development of China's capital market, a series of interviews on "30 people in China's capital market in 30 years" of the 21st century economic report aims to have a dialogue with the witnesses and witnesses, review the past, base on the present and look forward to the future. On December 24, the 21st century economic report held a special dialogue with Xie Geng, chairman of the national equity to equity company, to share his understanding of the construction of the multi-level capital market, and to deeply analyze the positioning of the new third board in the multi-level capital market, as well as the opportunities brought by the stratification and transfer system for listed companies.

Supplement the short board of capital market serving the real economy

The 21st century: after 30 years of development, China's multi-level capital market system has been continuously constructed and improved. What do you think of the context and logic of the development of China's multi-level capital market?

Xie Geng: the construction process of China's multi-level capital market system mainly follows three main lines: first, to serve the real economy; second, to serve residents' wealth management; third, to effectively control risks.

First of all, serving the real economy is the strategic basis for the construction of multi-level capital market. In recent years, great changes have taken place in the structure of China's real economy. First, private economy has made great progress. The central government has repeatedly stressed that to support the development of private economy, the capital market must also adapt to the changes in the ownership structure. Second, the transformation and upgrading of industrial structure. The proportion of service industry has increased significantly, the innovation elements have increased, and high-tech enterprises, advanced manufacturing industry and modern service industry have developed rapidly. Third, in terms of scale and structure, small and medium-sized enterprises have developed rapidly. After the reform of non tradable shares, some large central enterprises have been listed one after another. However, how to expand the service of capital market to small and medium-sized enterprises is a new topic brought about by economic development and also a short board that needs to be supplemented by the capital market.

Secondly, the demand of residents' wealth investment is the basis to realize the balance of investment and financing in multi-level capital market. In recent years, China's residents' income has increased significantly. In 2019, the per capita GDP has exceeded 10000 US dollars, and the savings rate has also maintained a very high level. However, with the growth of Chinese residents' wealth, they also face the objective problem of relatively few investment channels, which provides the possibility for the development of multi-level capital market. Because our country has not only diversified enterprise groups, but also a large number of organization groups with wealth accumulation and different risk preference, which need to match different multi-level capital markets to meet their investment needs.

Finally, to realize the effective docking of investment and financing, the essence is to realize hierarchical risk management through the multi-level design of capital market. From the perspective of international practice, enterprises of different sizes and types of industries have different risk characteristics and different valuation systems. It is difficult to make accurate valuations by putting them into a market platform. So after the high development of the computer industry in the United States, the emergence of NASDAQ. I think this may answer why there is a science and technology innovation board and why there is a gem? Why the new third board? This is not only the endogenous demand of the economy, but also the demand of risk hierarchical management based on the capital market, which is conducive to investors to better identify risks and better value in a similar industry type.

21st century: what is the background and original intention of building the new third board as a national stock exchange outside Shanghai and Shenzhen stock exchanges?

Xie Geng: when the new third board was set up, the macro-economy was facing the "superposition of three periods". It was necessary to change the mode of economic development and develop innovative economy. At that time, with the transformation and upgrading of China's economic structure and the deepening of economic openness, small and medium-sized enterprises and private enterprises flourished, which put forward a broader demand for capital market services. It can be said that the new three boards came into being under this background. It can be said that the construction and development of the new third board is an important embodiment of conforming to the economic development situation and better serving the diversified needs of the real economy, and it is also a solid step in the construction of China's multi-level capital market.

Why set up a new third board outside the Shanghai and Shenzhen markets? For a long time, the support of capital market for small and medium-sized enterprises and emerging business forms is not enough, and the existing market system can not effectively meet the needs of many small and medium-sized enterprises in China. Therefore, a new trading place is needed.

The essence of multi-level capital market is the hierarchical management of risk, and the realization way is the differential arrangement of system. According to the characteristics of small and medium-sized enterprises, the new third board has constructed a set of characteristic institutional arrangements different from Shanghai and Shenzhen markets. The establishment of the new third board has made up for the short board of capital market service for small and medium-sized enterprises and private economy. The multi-level capital market system from VC / PE to the exchange has also realized the service coverage of the whole cycle growth of enterprises. The capital market has a bright future to serve the small and medium-sized enterprises.

Building a market channel for the progressive development of enterprises

"21st century": there are a large number of companies listed on the new third board and their demands are diversified. In view of this market characteristics, what are the main explorations of the new third board?

Xie Geng: in the face of the large number of companies listed on the new third board, industry characteristics, development stage, scale performance, public degree, etc., and the market demand is complex and diversified, the new third board has explored and established an internal hierarchical management system and established a market structure arrangement for the progressive development of enterprises. In June 2016, for the first time, we divided listed companies into basic layer and innovation layer. In July this year, a three-level market structure was formed by adding a selection layer. Among them, the basic layer is located in the enterprise norms, which requires meeting the bottom line conditions such as sustainable operation, implementing bottom line supervision on the basis of matching the basic functions of financing transactions and higher requirements for investors' assets; the innovation layer is located in the cultivation of enterprises, which requires certain performance scale, growth or market recognition, and matches the more efficient financing transaction function to help enterprises make use of the capital market The market should be bigger and stronger; the selection layer should be located in the upgrading and development of enterprises, undertake the completion of public offering to non-specific qualified investors and high-quality listed companies with development potential, and match more convenient and efficient rules and regulations system. Through the implementation of market stratification, and supporting differentiated trading, investor suitability, supervision and service systems, the market investment and financing docking will be more efficient, and the cost-benefit of enterprises will be more matched.

The 21st century: at present, the establishment of the transfer mechanism has entered the practical stage. What does the establishment of this system mean for listed enterprises? What is the positive significance for the improvement of multi-level capital market system?

Xie Geng: on the basis of optimizing market stratification, the new third board reform has established the mechanism of direct transfer of selected companies to Shanghai and Shenzhen stock exchanges, further opening up capital channels for the growth and growth of small and medium-sized enterprises, which is conducive to better play the hub function of the new third board Market as a link between the preceding and the following, and realize the interconnection of multi-level capital markets.

The establishment of the transfer board mechanism not only provides a new path of "financing, trading and listing" for enterprises, but also takes into account the development of the main business and the capital market planning, making the development expectation more clear and the rising track more coherent; it also makes the convergence of various sectors of the capital market more smooth, realizing the dislocation development, mutual cooperation and organic coordination.

In the multi-level capital market system, different levels of the market have their own positioning. Under their respective positioning, what we need to do is to give the market more choice space. For example, if the share capital of a company listed on the new third board is not small, the performance is good, the operation is also standardized, and the equity is dispersed, there is no need to do another IPO, and can directly apply to the exchange for listing. The establishment of the transfer board system, so that enterprises in addition to the IPO, more than a listing path.

21st century: in the face of many listed companies, how does the new third board do a good job in risk prevention and control?

Xie Geng: the hierarchical management system helps to realize hierarchical risk management. At the same time, we actively explore the establishment of supervision and risk control system for small and medium-sized enterprises. First, in accordance with the requirements of "scientific supervision, classified supervision and precise supervision", we should continue to strengthen the construction of regulatory system and mechanism, adhere to the principle of information disclosure as the center and rule-based supervision, improve and improve market self-discipline management, and implement classified supervision and hierarchical supervision on listed companies; at present, the new third board has formed a new three board system based on laws and regulations, departmental rules and administrative normative documents Based on the market self-discipline rules as the main body of the system, the preliminary construction of administrative supervision and self-discipline management of information sharing, regulatory cooperation, case investigation and handling mechanism and risk management mechanism. Second, we should focus on promoting science and technology supervision, launch the information disclosure intelligent supervision system (sharp weapon system) and a new generation of supervision system, improve the risk prevention and control mechanism, and improve the prevention and control system from the risk identification, monitoring and response. Third, continue to strengthen market training, and promote the extension of supervision with the normalized market training service mechanism.

In the issue of risk prevention and control of small and medium-sized enterprises, we need to consider the cost problem in particular. Because norms are fundamental to the market, but they all need costs. We should not only solve the problem of openness and transparency of small and medium-sized enterprises, but also explore how to reduce the cost as much as possible. Therefore, according to the characteristics of small and medium-sized enterprises, we should actively explore the establishment and improvement of the differential information disclosure system of vertical and horizontal levels, improve the efficiency of information disclosure, and reduce the cost of enterprise information disclosure and the cost of information search of investors.

21st century: the lack of liquidity of companies listed on the new third board has always been a problem of concern to the market. How do you think this problem should be viewed objectively?

Xie Geng: the issue of liquidity has always been of great concern. The essence of capital market is transaction, and liquidity is the evaluation of market transaction efficiency. Liquidity is the realization efficiency of financial assets. When the new third board was just set up, it was the agreement trading. It is very difficult for the agreement trading market to play the two core roles of price discovery and risk management, so there is no liquidity problem. In 2014, we introduced the market maker system; in 2018, we implemented the call auction system; this year, we introduced the continuous bidding system in the selection layer to promote more fair trading prices.

We realize that institutional supply is on the one hand, another factor affecting the liquidity of the new third board market is the characteristics of small and medium-sized enterprises. First, equity concentration. The company did not go through IPO when it was listed, and the degree of stock dispersion was low. Second, the popularity is not high. Most of the new third board enterprises are distributed in the subdivision field of the industrial chain, and they have not much advantage in popularity. Third, the scale of equity is small, which does not match the allocation needs of large institutional investors. Fourth, the willingness of intermediary agencies is not high. Compared with the service of large enterprises and mature enterprises, the cost-benefit of intermediary services for small and medium-sized enterprises is unbalanced.

To further improve the liquidity of the new third board market, it is necessary to increase the number of investors and optimize the structure of investors. In the new third board reform, the differentiated investor access standard is implemented, and the asset requirements of the basic layer, innovation layer and selected layer are 2 million, 1.5 million and 1 million respectively; the introduction of public funds and QFII / rqfii makes it clear that the public funds' investment in selected stocks is equivalent to listed stocks, and the inclusion of selected layers in the investment scope of stock funds can be exempted from holding the general meeting of holders. In terms of trading system, the selective layer implements continuous auction trading, and the call auction frequency of innovation layer and basic layer is 5 times higher than that before the reform, and market making transaction is retained. At present, the number of qualified investors has increased from 220000 before the reform to 1.65 million, the structure of investors has also begun to diversify, and the market liquidity has improved. But we should also realize that the implementation of the system does not mean that it will take immediate effect. The market has a process of cultivation. Next, we will introduce measures to improve liquidity, such as hybrid trading of selected layers. I believe that with the continuous promotion of the reform and innovation of the new third board, the positive effects will be further released.