China Mulls Merging Financial Regulators, Reuters Reports

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China is considering merging regulators for the banking, insurance and securities industries into one body, Reuters reported.

The “uncoordinated” policy response during the recent stocks selloff prompted senior leadership to begin internal discussions about combining the three main financial regulators into one commission, Reuters reported, citing unidentified people as saying.

Regulators scrambled to halt a $5 trillion mainland Chinese stocks rout that started in June, spurred by a record increase in margin debt. Shares have since shown signs of stabilization, with the benchmark index entering a bull market this month, after regulators imposed measures including banning major shareholdersfrom selling shares, ordering state funds to buy stocks and restricting short selling. Last week, China moved to contain leveraged wagers, cutting by half the amount of borrowed money investors can use to buy shares.

A replacement for China Securities Regulatory Commission Chairman Xiao Gang is already being explored, Reuters said. Fang Xinghai, who was appointed as vice chairman of the securities regulator last month, said China will expand the trading quota and the number of eligible shares for the Shanghai-Hong Kong stock link, according to comments posted on the CSRC’s website on Tuesday.

The division between the CSRC and other regulators for banking and insurance prevents any one from having a full overview, Li Jiange, vice chairman of Central Huijin Investment, a unit of China’s sovereign wealth fund, was cited as saying by Caixin magazine last month.

— With assistance by Kana Nishizawa, and Li Liu

(Adds background in third paragraph about stocks rout.)
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