Research On The Disciplinary Power Of Stock Exchange

The existence of illegal acts in the securities market requires the corresponding disciplinary mechanism to be matched.The legal sanctions of the government regulators and the disciplinary action of the stock exchange are the main ways.According to the different configurations of the two mechanisms,it can be divided into three main modes: "cooperative","self-discipline" and "government-led".Although those modes are different from each other,the disciplinary action of the stock exchange has developed into an irreplaceable disciplinary mechanism,which plays an important role in the protection of investor rights and the maintenance of the order of the securities market.In order to fulfill the frontline supervision function of the securities market,the stock exchange has established the corresponding disciplinary mechanism.The disciplinary institution is set up as the internal organs of the stock exchange or the independent institutions of the stock exchange.The disciplinary objects are members and related persons,or issuers,listed companies and its directors,supervisors and senior management personnel,investors,members,law firms and accounting firms and other securities intermediaries and other market participants;disciplinary basis,and some through national legislation to be authorized,and some through the stock exchange Regulations,rules and regulations,unilateral commitment to be clear;disciplinary approaches includes property discipline,reputational discipline and behavioral disciplinary,such as fines,public condemnation,private condemnation,criticism,restrictions on transactions,banning and dismissal;disciplinary procedures are set differently for cases,hearing procedures,investigation and adjudication function separation and other due process requirements in the relevant system is reflected.There are corresponding legal relationship between the stock exchange and members,listed companies,intermediaries,investors through disciplinary action.There are some different views about the nature of disciplinary action,such as "breach of contract","community punishment","special power relations".This paper examines the evolution of the development history and self-regulation of the stock exchange,and finds out that the self-regulation of the stock exchange has a tendency of "public right".To some extent,the disciplinary action is power.It’s a kind of social power.First,the stockexchange is social organization;Second,the stock exchange disciplinary action has sufficient social resources and legal resources;Third,the stock exchange has social control power,such as reputation mechanism and market power.In terms of external power structure,there is complementary relationship between the stock exchange and the securities regulator.In terms of theoretical value,the stock exchange disciplinary power is deterrence and relief,highly economic valuable.And it’s an important law enforcement.It’s a supplement to the punishment of government regulator.Is it necessary to comply with due process requirements in the disciplinary action of the stock exchange? In the case of Intercontinental Industries,Inc.v.American Stock Exchange,United States v.Solomon and other case judgments,most courts have a positive attitude.This tendency eventually internalized into the rules of the stock exchange.It’s an indisputable fact that due process should be applicable in the disciplinary action of the stock exchange.Although the court did not dare to neglect applicable necessity of due process,they did not make a strict explanation of the extent of due process application.On the one hand,taking into account the particularity of circumstances,the courts explain the application of due process by case-based reasoning,rather than applying directly and absolutely.On the other hand,the courts respect the discretion of the stock exchange.Judicial intervene is started after exhaustive relief.This article argues that due process is a flexible and variable concept,it keeps changing as time,place,occasion,content and other factors change.Its judgment criteria also need to be in special circumstances and discretion.In the case of the application of due process and the disciplinary power of the stock exchange,it is necessary to protect the basic rights of the person disciplined and to avoid excessive generalization and to bear the burden on the exchange.Therefore,there are two perspectives which are need to be considered about the application of due process of the disciplinary power of the stock exchange.The two perspectives are procedural "minimum impartiality" and "substantive standards" of the entity.The reasons that judicial power intervene in the disciplinary power of the stock exchange include two aspects: the mutual checks and demands of the social power and the state power,and the realistic consideration of the conflict of interests and the opacity of the exercise of the stock market.It needs balances between the stock exchangeautonomy and judicial supervision about how to intervene.For this reason,some unique systems are established in the relevant legislation and judicial practice.The court turns "the nature of subject" to "the nature of the behavior","public function","public factors" and other criteria when determining jurisdiction.And "exhaustive relief" is established as litigation barrier mechanism.The court make distinction between "factual issues" and "legal issues" when they implement a limited review.There are some problems can be found that lack of independence,incompletely of disciplinary system,ineffectiveness and relief mechanism vacuum through sorting the disciplinary action data of the Shenzhen Stock Exchange from 1998 to 2016.In order to solve these problems,we need to make some improvements.The disciplinary mode of the stock exchange is changed from "investor-oriented" to "member-centered",and the self-discipline supervision gate is moved forward;the disciplinary approach is diversified and the discipline should be actively promoted;the disciplinary power of the stock exchange should be strengthen about the legal nature,stability,predictability,timeliness and authoritative construction;establishing the SFC reconsideration procedures,improving the rights relief system;the construction of administrative litigation relief system and achievement the judicial intervention of the limited intervention finally.