From Chinese Press

Capital market regulation

(China Daily)
Updated: 2010-04-26 08:03

The fraud case of Goldman Sachs serves as a warning to China to strengthen its market regulations, says an article in the Huashang Post. Excerpts:

Recently, the US Securities and Exchange Commission filed charges against Goldman Sachs, claiming that the firm defrauded investors in a mortgage-related deal. This marked the initiation of tough regulation on financial derivatives on Wall Street.

The Goldman case sounds alarms for market regulation mechanisms in China, whose capital market models Wall Street practices. Due to an overwhelming number of medium and small-sized inexperienced investors, China's capital market bears a weaker risk tolerance compared to its US counterpart.

With the emergence of stock index futures in the burgeoning capital market, technical measures need to be enacted to restrict the entry of medium and small-sized investors.

Actually, the strict supervision mechanism, instead of denying their entry, can help lower the high risk in further development. Thus, a powerful regulation is needed to protect the interests of the vulnerable majority of investors.

(China Daily 04/26/2010 page9)