China’s securities companies continue to be ill-equipped for upcoming market developments and innovations, according to Song Liping, the president and CEO of the Shenzhen Stock Exchange.
Concerning execution matters in China, she outlined to the 2013 Lujiazui Forum a future pathway where she saw “improvements to the risk tolerance of the overall economic system to accelerate development of ChiNext, the national OTC market and regional equity markets”.
From the vantage point of the Shenzhen Stock Exchange, Song does not think that China’s securities companies are ready for this next phase of development, based on current levels of sponsorship of ChiNext companies, development of OTC markets, private placement bonds “and other areas of product innovation”.
An example Song put forward in the forum was that of asset-backed securities products, an area that she thinks will be important in the diversification of China’s markers. However, securities companies would need to perform due diligence on underlying assets, and invest in pricing and market making.
At present, she doesn’t see the probable participants as possessing sufficient sophistication to undertake such tasks.
“They are still involved in the low-level competition for ‘luring projects’ and lack both cohesive advantages and whole-process risk control due to historical reasons.”