Embattled China Securities Regulator Grapples With Staff Exodus

  • Head of CSRC is second official to acknowledge talent shortage
  • Staffers quit under pressure from rapidly developing markets

The head of China’s securities regulator has become the second senior finance industry official this month to highlight the lack of skilled professionals to handle the agency’s ever-widening responsibilities amid turmoil that rocked the nation’s markets.

Many employees at the China Securities Regulatory Commission had left amid mounting pressure from rapid changes in capital markets, Xiao Gang, chairman of the CSRC, said at the agency’s annual meeting in Beijing on Saturday. Measures have to be taken to deal with the exodus, he said.

“We have to treat this properly to transform the pressure to motivation,” Xiao said, as part of a broader speech that reflected on the regulator’s weaknesses following a review of the gyrations that had driven the stock market’s rapid boom-to-bust cycles since mid-2014.

The comments came about a week after Li Jiange, vice chairman of Central Huijin Investment, a unit of China’s sovereign wealth fund, blamed the CSRC’s talent shortage for the turmoil. The regulator has drawn criticism recently over the functioning of market mechanisms, most recently earlier this month when it scrapped a stock circuit-breaker system just four days after its introduction.

Stock-market crises will return if the regulator doesn’t resolve its talent shortage, Central Huijin’s Li said at a conference on Jan. 9, according to a transcript of his speech compiled by the Paper, an online news provider backed by Shanghai United Media Group.

Li, who is also a former CSRC vice chairman, cited reasons such as a less competitive compensation mechanism and curbs on government employees’ spouses and children from working overseas for exacerbating the exodus of talent from the regulator, according to the transcript. Li questioned if the regulator was capable of providing effective supervision if the quality of its officials failed to keep up with those that they are supposed to govern, according to the transcript.

In his speech, Xiao prescribed solutions to solving the shortage such as by providing targeted training to officials whose skills don’t match the tasks they’re given. The former banker, who has been at the CSRC’s helm since 2013, also recommended charting career development plans and responding to “reasonable requests,” citing legitimate compensation and employment benefits among items that need to be guaranteed.

Xiao started his annual speech with a “deep reflection of the lessons” from the stock market rout, outlining a list of reasons causing the boom and then bust of the domestic stock market last year. An immature bourse and participants, incomplete trading rules, an inadequate market system and an inappropriate regulatory system were to blame and regulators will learn from their mistakes, Xiao said.

— With assistance by Aipeng Soo

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