Construction Of Credit System In China’s Capital Market Intermediary Institutions

From the establishment of the Centralized Exchange of Stocks, Chinese capital market has gone through20years. During these years great success has achieved, while at the same time, a lot of problems come up. The capital market is dominated by three main bodies——investors, listed companies and intermediaries. Intermediaries, a credit information filter in the capital market, has two main functions:providing professional review for the listed company to ensure the quality of capital market information; providing professional services for investors to access and interpret information. Therefore, the intermediary institution’s own credit status has become an important part in the capital market credit system. Intermediaries has to be independent, objective and fair so as to ensure that the credibility of the audit report released by listed companies, legal opinions, asset valuation and credit rating. In this way the capital market transactions costs can be reduced, the capital market efficiency be enhanced and the interests of investors be protected. However, many of the events, such as Yahoo, Cisco, Enron, or the Guangxia, Joan China source and red events all reveal that the status of capital market intermediaries lack of credit. So for our country, we must learn from experiences and give a systematic analysis of the credit status quo of China’s capital market intermediaries to identify the deeper reasons. It becomes an important issue to improve China’s capital market intermediaries credit system and regulate the capital market intermediaries.The article is divided into four parts:The first chapter introduces the basic theory of the credit system of capital market intermediaries. First a brief introduction on the definition and classification of the capital market intermediaries is given; then it is followed by defining the meaning of the intermediaries of credit and credit system; at last the significance of the credit system of intermediaries on the capital market is discussed.Chapter Ⅱ is theoretical analysis about credit situation and its causes of capital market intermediaries in China. First of all, a more comprehensive analysis on why China’s capital market intermediaries lack of credit is presented in order to clearly define their dishonest behavior. Then is a detailed analysis of the causes of dishonesty by the intermediaries, which can be summarized in four aspects:imperfect legal system of the specification intermediaries credit behavior, imperfect capital market regulatory institution-building, lacking contract credit, inadequate intermediaries independence. Analysis of intermediaries credit situation and its causes set the course for further improvement of the countermeasures.Chapter Ⅲ After the Introduction of USA regulation on the credit of the capital market intermediaries, the author obtains the revelation of the credit system of China’s capital market intermediaries. Firstly, the author explores the USA regulation on the credit of the capital market intermediaries. there are four aspects:constantly improving Legislation, enhancing the government’s external supervision of intermediaries, improving independence of intermediary, Increasing the liability of intermediaries. Secondly, based on United States regulatory measures, the author proposes five points of inspiration about an intermediary credit institution improvement in China. It mainly clarifies that the relevant legislation needs to be continuously improving, credit system should be constructed in the whole society, independence of intermediaries and regulatory measures constantly be improved and intermediaries practiced in technical aspects.Chapter Ⅳ Suggestions for improvement of the credit system of intermediaries corresponding to the causes of the credit situation of intermediaries. Specific recommendations are provided from four aspects:improvement of the legislation in capital market intermediaries credit, the improvement of supervision, contract credit culture cultivation and intermediaries independence. For the legislation perfection, the main recommendations cover four areas, the credit legislation, criminal legislation, the Civil Aspects legislation, legislation of access and exit system to intermediaries; the improvement of supervision is to strengthen the combination of government regulation and self-regulatory; for independence improvement of the intermediary institutions, it is mainly through the improvement of the intermediary’s business model and the optimization of its organizational form.