Research On The Legal System Of China's OTC Market Supervision

Through hundreds of years of development in the market economy,capital markets have evolved to a very advanced stage, forming amulti-level pyramid system. As an important part at the bottom of thepyramid, the OTC market can provide direct channels of financing andinvestment to the companies which cannot enter the stock exchange or thesecond board market. It plays an integral role in meeting variousinvestment and financing demands of different market entities, and betterachieving the optimal allocation of capital resources. Therefore the OTCmarket takes a crucial and basic position in the capital markets.The short history of China's economic reform witnesses a late start ofcapital markets and crooked development in the OTC market. When I studythe history and current situations of China's OTC market, I find that thepositioning of China's OTC market is still not clear and how to build theOTC market is still in an exploration. Therefore, it is a top priority to drawlessons in the construction of China's OTC market, to learn from thesophisticated experience in the OTC market development overseas, and tobuild an OTC market in line with China's actual situation, which is also thepurpose of this study.In this paper adopts mainly approaches of comparative study andhistorical study. A comprehensive analysis and systematic study isconducted on the OTC market and supervision laws in the world's majorcountries and regions before I summarize some common and regular points.On this basis, I put forward some proposals in details on the regulatoryregime for China's OTC market. This paper is divided into three parts.The first part is a general background of the OTC market supervision. First, I give a definition of the OTC market by comparing the first and thesecond board markets, analyzing the role of the OTC market and its historyof world-wide development, so as to make the study in this paper wellfocused. Then, I take the samples of the OTC market in US, UK, Japan,Taiwan and respectively analyze its development and characteristics fordifferent inspirations. What's more, under the use of the theory of moderatesupervision, I conduct a comprehensive survey of regulatory laws invarious countries in terms of regulatory philosophy, regulatory mode andmarket access, transaction supervision, information disclosure. Then I drawa generic conclusion on the basis of comparative analysis.The second part is an analysis on the development and regulatory lawsof China's OTC market. From the perspective of government supervision, Ireview and summarize the characteristics of China's OTC market in variousstages of development, and evaluate the role played by the government.Whereas, I analyze China's regulatory system in regard to the currentsituations of the OTC market, and conclude the major problems in therelated areas, which lays out the foundation for building the regulatoryregime later on in the paper.The third part is a proposal for the legal system in China's OTCmarket supervision and design some regimes in details. From the aspect ofconstructing a double market system, I raise the proposals of OTC marketlaw status, regulatory mode and specific legal systems.