Securities regulator denies 'quit' report

China Securities Regulatory Commission Chairman Xiao Gang addresses the Asian Financial Forum in Hong Kong on Jan 19, 2015.
China Securities Regulatory Commission Chairman Xiao Gang addresses the Asian Financial Forum in Hong Kong on Jan 19, 2015.PHOTO: REUTERS

BEIJING • Mr Xiao Gang, the head of China's securities regulator, offered to resign last week, Reuters reported, citing unidentified people. It was not clear whether the government had accepted his offer, Reuters said in the report on its website.

However, the regulator denied the report in a statement yesterday on its official WeChat and Weibo accounts.

The 57-year-old chairman of China Securities Regulatory Commission (CSRC) had offered to resign last week after his brainchild, a "circuit breaker" mechanism to limit stock market losses, was blamed for exacerbating a sharp sell-off, a source with ties to the leadership and a financial industry source told Reuters.

The circuit breaker was deactivated on Jan 7, just three days after its introduction.

"The (Communist Party central leadership) is extremely unhappy with Xiao Gang. It is certain he will change jobs," the source close to the leadership said, adding it was unclear where he would go next. "Xiao Gang handed in his resignation last week," said the financial industry source. Both requested anonymity because they were not authorised to speak to the media.

Mr Xiao's term does not formally expire until end-2018. He had earlier highlighted the lack of skilled professionals to handle the CSRC's ever-widening responsibilities amid turmoil that rocked the nation's markets.

Many CSRC staff had left amid mounting pressure from rapid changes in capital markets, he told the agency's annual meeting last 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," Mr Xiao said, as part of a broader speech in Beijing 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. It has drawn criticism recently over the functioning of market mechanisms.

Mr 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. Stock market crises will return if the regulator does not resolve its talent shortage, Mr Li said at a conference on Jan 9, according to media reports.

He cited reasons like a less competitive compensation mechanism and curbs on government employees' spouses and children from working overseas for exacerbating the regulator's talent exodus, according to the transcript.

In his speech, Mr Xiao had prescribed solutions to solving the shortage. It was unclear if his speech was before or after his offer to resign.

REUTERS, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on January 19, 2016, with the headline 'Securities regulator denies 'quit' report'. Print Edition | Subscribe