On March 13th, the Tsinghua PBCSF Financiers Forum continued its Capital Markets Lectures in Tsinghua's main building to rapt audiences. WANG Dongming delivered a speech entitled "Investment Bank Influence in Chinese Capital Markets". Now the Chairman of the Board of Directors at CITIC SecuritiesCITIC Private Equity Funds Management, WANG was previously the Associate General Manager of Beijing Hua Yuan Property Co., Ltd., Vice President of Scotiabank Securities Canada Company, General Manager of International Department at China Securitiesthe Vice President of China Southern Securities among many other positions, all allowing him a uniqueinsightful viewpoint.
As one of the elite members of the securities fraternity, WANG Dongming is among those who have returned to China after gaining both perspectiveexperience abroad. He witnessed Chinese capital markets developing, maturingevolving firsthand. As an active participant in these markets, he led CITIC Securities in its climb to the leading position in the dynamic Chinese capital markets. His talk covered various pressing issues in the current securities business, including the systemic risk that now exists in the financial system, reducing bureaucracydecentralization during the reforms enacted by the China Securities Regulatory Commission (CSRC), the conflict of interests between companiesinvestment banks,specific obstacles confronting CITIC Securities as it developed. Further, he shared his rich experience with the audience in an effectiveengaging discourse.
In regard to systemic risk, WANG, based on his own in-depth understanding of how current securities firms operate in the market, indicated that the systemic risk within the securities business, actually, is not inherent, as the securities industry acts as an intermediarythe capital is managed by a third party. The systemic risk is, therefore, mainly one of liquidity. However, according to WANG, this type of risk can not be ignored due to the fact that China has a large banking systemthe difficulties lie in determining how to spread risk appropriately.
At the same time, he commented that the opening-up of China must encompass two aspects - domesticforeign spheres. Internationally, China should allow foreign enterprises to compete with domestic companies while promoting mixed operation within domestic markets. He emphasized that mixed operation benefits product market competitiveness, resulting in more financial products availabledesigned for use in the real economy.
In addition, he evaluated the efforts of deregulation made by the China Securities Regulatory Commission (CSRC)other financial regulators in recent years. He highlighted that reforms should be based on the adjustment of interestdecentralization, only by which can financial markets, such as the securities market regulated by multiple authorities, have the opportunity to integrate, grow,mature.
As to the forthcoming regulations related to asset securitization, WANG expressed an optimistic attitude. He believes that the key to controlling risk lies in basic assets,that a risk control system should be established during the sales process so that the product issuer hold partial responsibility for the productprovisions are created when the commission continues within the asset pool.
The lecture lasted two hoursWANG spoke to a hall at maximum occupancy. The deep exploration of the many issues facing the current Chinese securities industry offered participants the unique opportunity to attain a more accurateclearer understanding of the influence investment banks may have in the Chinese capital markets nowin the future.
