Legal status of stock exchanges
Source: Author: Release time: 2008-11-29
(1) "Public institution" can be an authentic administrative agencies. In order to dilute the fact that administrative agencies are constantly expanding, a considerable number of agencies that were originally established as agencies for the purpose of performing government functions have been incorporated into public institutions. These agencies exercise administrative power, and officials are not included in the national civil service establishment. The funding comes partly from the national finance and partly from fees collected by the agencies from the industries under their jurisdiction. The China Securities Regulatory Commission, the State Press and Publication Administration, the National Copyright Administration, the National Trademark Office, the National Patent Office, Xinhua News Agency and other institutions are all "public institutions". Every time "downsizing" occurs, some government agencies will become "public institutions."
(2) "Public institution" can be a compulsory law enforcement agency, such as "reeducation through labor center" or "reeducation through labor farm".
(3) "Public institution" can be a holding company. For example, universities and scientific research institutions can be shareholders of several commercial companies.
(4) "Public institution" can be a commercial company for profit, such as a publishing house or a service company.
(5) "Public institutions" can also be private institutions that provide professional services, such as law firms and accounting firms.
In short, referring to the Stock Exchange as a public institution does not provide any information that helps explain its true attributes.
2.3 Government Regulation of the Shanghai Stock Exchange
In the early days of the exchange’s establishment, legal documents always stated the regulatory authority of the exchange in a flexible way, thus being able to accommodate both local governments and the central government. Dual jurisdiction of the government without causing disputes over authority. According to the administrative regulations promulgated by the Shanghai Municipal Government in November 1990, the Shanghai Stock Exchange obtained legal person status in accordance with the administrative regulations of the municipal government. However, the administrative regulations also recognized that the power to establish a stock exchange belongs to the "national securities regulatory authority." [xix] At the same time, the Shanghai Stock Exchange’s charter also states that it is subject to “the leadership, management and supervision of relevant departments of the People’s Bank of China, the national securities regulatory authority.” [xx]
At the beginning of the establishment of the Shanghai Stock Exchange, the local government held the control power. At the same time, the Shanghai Stock Exchange, like other organizations classified as "financial institutions", was subject to the Head Office of the People's Bank of China and the Shanghai Stock Exchange. Municipal branch supervision. At the end of 1992, the State Council reclassified the jurisdiction of the securities market. The People's Bank of China transferred the power to regulate the securities market and securities operating institutions to the newly established Securities Commission. "The Shanghai and Shenzhen Stock Exchanges are under the centralized management of the local governments and supervised by the China Securities Regulatory Commission." "[xxi] It can be seen that from 1990 to 1996, local governments played a major role in the management of exchanges.
The exchanges in Shanghai and Shenzhen were initially the products of local "joint-stock pilot projects". With the full rollout of the "joint-stock pilot projects", the exchanges in Shanghai and Shenzhen transformed into national securities trading centers. The regulatory model dominated by local governments has also changed. After the mid-1990s, the main trend surrounding exchange regulation was the restoration of centralization: the regulatory power of the China Securities Regulatory Commission continued to expand, while the regulatory power of local governments gradually retreated. [xxii] After the mid-1990s, stock exchanges have actually become "front-line market regulatory agencies" under the direct control of the China Securities Regulatory Commission, and local governments only have influence to a very limited extent. The management authority of exchanges shows from one aspect the changes in the power boundaries of the central government and local governments after the mid-1990s. Like insurance, industry and commerce, customs, state-owned assets management and other fields, the securities market management system has always followed the centralized trend. The trajectory climbs, or at least that’s what the legal formulation clearly shows.
If we analyze it realistically, we cannot reject the conclusion that the Shanghai Stock Exchange is not a "legal person" in the sense of civil law, let alone a membership association, but a responsibility established and managed by the government. The public authority responsible for the organization and operation of the securities market. The legal text regards “membership” as a main feature of the exchange, reflecting the path dependence of thinking and expression—an inertia that attempts to “integrate with international practices.” Here, there is a preconceived logic that dominates thinking and expression: "Foreign exchanges are mainly member-based, and Chinese exchanges must be in line with international practices. Therefore, Chinese exchanges must also be member-based.
"However, this kind of "integration" ignores some prerequisite questions: Is it necessary and possible for stock exchanges in China's economic transformation period to adopt a membership system? Do the exchanges that actually exist in China really adopt a membership system? If not, why must it be called a membership system? It is not difficult to imagine that if one day the "accumulation" of the Shanghai Stock Exchange is actually distributed to "members", it will be impossible. Corrected historical misunderstandings
2.4 What is a membership system? Taking NYSE as a case study
2.4.1 Member-based exchanges and guilds. Exclusive tradition
Member-based exchanges come from the Western guild tradition. The development trajectory of guilds is based on self-discipline and industry exclusivity as the ultimate goal.
The NYSE establishes self-regulatory rules. Attracting reputable securities firms to join, an elite club was formed, and the market share was continuously expanded, eventually forming an exclusive advantage. The number of regular members of the NYSE is equal to the number of seats on the trading floor. Regular members are "seatholders". ". Regular members must be natural persons, but companies or other institutions can be trust beneficiaries of the "membership relationship". The prerequisite for obtaining membership is that the applicant must transfer or lease trading seats or memberships from existing members. Regular members have the same rights as shareholders of a company, such as: electing directors and participating in the distribution of remaining assets when the company is dissolved; regular members can occupy seats on the exchange, use the exchange's equipment, and conduct direct transactions on the exchange without going through a broker.
The traditional NYSE membership system has four different levels. Behind each level is the exclusive interests of members: First, the number of members and trading seats are limited, and non-members are not allowed to enter the market for trading, so on-site trading It is a market exclusive to members; secondly, before 1979, NYSE had prohibited members from engaging in any over-the-counter transactions, thereby ensuring that NYSE itself had exclusive control of the trading market for listed stocks; thirdly, before 1971, NYSE implemented minimum commission rules—— The commission charged by a member when accepting an entrustment from a non-member brokerage must not be lower than the minimum limit prescribed by NYSE.
The minimum commission rule makes the cost of executing entrusted buying and selling orders by non-member brokerage firms destined to exceed that of member brokerage firms, making it impossible to execute entrusted trading orders. Instructions compete with members; fourth, before 1968, the NYSE had always implemented a unified commission standard, using the price of one hundred shares of integer transactions as the basis for calculating commissions, and prohibited members from providing commission discounts to bulk trading customers. In essence, the unified commission standard was. It is forbidden for members to compete with each other and undermine the foundation of monopoly. [xxiii] There is a seemingly reasonable logic behind membership-based exchanges: fair and efficient transactions require centralized bidding, and centralized bidding requires a trading floor, and a trading floor in the trading floor. Trading can only accommodate a small number of market participants, and those who are qualified to participate in floor trading should form a self-regulatory society. However, the factual basis for this logic no longer exists: electronic technology has brought more changes to China. Efficient, more economical, and fairer centralized bidding transactions—this kind of transaction does not require a physical trading floor. Buyers and sellers can even send buying and selling quotes to the trading host through computer terminals without going through a broker. The capacity of fiber optic communications, broadband networks, and high-capacity hard drives to accommodate market participants is almost unlimited, and the only limit to institutional innovation is our own imagination.
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