Xiao Gang: Virtual asset exchanges are bound to happen in the future

Xiao Gang, former chairman of the China Securities Regulatory Commission, said at the Pushan Forum and the CF40 Sun Yefang Reading Conference that it is necessary to actively develop the digital capital market.

He said that the digital economy has ushered in a new opportunity for development. Before the epidemic, the digital economy had developed rapidly. Through this epidemic, all countries have fully realized the importance and urgency of developing the digital economy, and all countries are increasing their investment.

In the future, competition will become increasingly fierce in the development of digital economy and digital finance. Our country is at the forefront of the world in the development of digital economy and digital finance, and the capital market is also at the forefront in the use of digital and data.

Xiao Gang said that my country's capital market has been paperless since the 1990s, which can be said to have surpassed other countries, especially developed countries that have used traditional trading models of hand gestures and paper stocks for hundreds of years. This really reflects our latecomer advantage.

He said that in the future, we still face many challenges in developing the digital capital market, including:

The first aspect is the challenge of global competition. Our securities and fund institutions still have insufficient investment in IT. Especially compared with securities companies and fund management companies in some developed countries, our investment in technology is still insufficient.

Secondly, integration with digital currencies also faces challenges. Many countries are now developing legal digital currencies. After legal digital currencies are issued in the future, how will they be integrated with the capital market? What fundamental changes will it bring?

The third aspect is how some technology-based enterprises and financial institutions in our capital market, that is, technology companies and financial institutions, engage in mixed operations. This issue is becoming increasingly prominent.

Many technology companies are engaged in capital market and financial businesses. Our financial institutions, including securities funds and other institutions, also need to achieve digital transformation, and some financial groups actually need to transform into technology companies. Therefore, new situations such as the integration, competition and inter-industry of the two are everywhere. This raises new issues for the development of our entire financial industry, financial markets and the prevention of financial risks.

The fourth aspect is the challenge of supervision. With the development of digital economy, digital finance, and especially digital capital market, how to form a new supervision framework, supervision means and supervision tools, and improve the supervision methods, compared with traditional market supervision, is facing a new situation that is very different.

The fifth aspect is the protection of consumers and investors, which is an increasingly arduous task. Under the conditions of the development of digital finance and digital capital markets, the boundaries of some products and businesses are becoming increasingly blurred, and our laws and regulations cannot keep up. In this case, how to protect investors and consumers is also a big problem.

Sixth, the development of the digital capital market is also facing the problem of organizational change. The most typical example is virtual asset exchanges, which are bound to happen in the future. How to deal with such organizational changes is also a problem we may need to encounter.

In addition, if financial institutions want to achieve digital transformation, their internal organizational structure must also change. Therefore, for the securities and fund industries and the futures industry, the traditional internal organizational structure and business operation processes and models must be rebuilt and must be customer-centric, rather than product-centric and account-centric as they are now. These aspects will bring about great changes.

There are still many issues that are being debated regarding the development of the digital capital market, such as monopoly, development path, disintermediation, information disclosure, and how to balance the inclusiveness and appropriateness of investors. These are issues that need to be further clarified and discussed in our research and development of the digital capital market.

Xiao Gang said that in the future development of the digital capital market, there are several principles that require further consensus.

The first is that we must adhere to the principles of openness, inclusiveness, sharing and fairness in developing the digital capital market. We must build the digital capital market in accordance with digital thinking and cannot develop it behind closed doors.

The second is that we must actively embrace new technologies, prudently innovate business models, integrate the experience of Internet companies and international peers, and accelerate the integration of capital markets and technology.

The third is to promote data interconnection and interoperability and create a fair market environment.

The fourth is to carry out digital innovation closely around the needs of the real economy. Although the digital capital market has made great innovations in technology, models and means compared with the traditional capital market, its essence has not changed, that is, the capital market still serves enterprises and investors. In other words, through the development of the digital capital market, it must ultimately bring benefits and convenience to enterprises, the real economy, financiers and investors, and promote economic development. This is the fundamental purpose of developing a digital capital market.