The WFE 2020 Series: Jianjun Wang, President and Chief Executive Officer, Shenzhen Stock Exchange (SZSE)
1. As we usher in the year 2020, could you please share your insights on the landscape of APAC exchange industry by 2025?
The APAC market is one of the most dynamic markets in the world. According to IMF, the APAC is the fastest growing region in the world and contributes two-thirds of the global economic growth. As WFE statistics indicate, the APAC is the most active IPO market in the world, accounting for nearly 60% of the world’s IPO proceeds in 2019. The APAC market promises great prospects afforded by the socio-economic environment and its own growth trajectory, heralding a rising exchange industry in the region.
Exchanges will be empowered for wider scope of development. The APAC has a young population infused with zest for innovation. Huge potential for technological progress waits to be tapped. It is urgent for the APAC to take advantage of the risk pricing function of the capital market to provide a sound financing environment for commercialization and productive application of technology.. Exchanges are indispensable platforms of resources allocation. With the technological and economic progress in APAC, the exchanges will definitely play an important role in regional economic restructuring and upgrading.
The digital transformation will be further accelerated. With the evolution of trading modes, investment philosophy, technological capability, and regulatory requirements in the securities and futures market, demands for passive investment, intelligent advisory, and regulatory technology have emerged in response. In 2018, the revenue of global financial data analysis industry exceeded USD 30 billion
[1]. In the future, exchanges will accelerate digital transformation. The role of data and information technology will be even more significant.
Cross-market cooperation will be more extensive and at greater depths. With the inclusion and increased weighting of emerging markets like China in FTSE Russell, MSCI and other global indices, the level of internationalization of the APAC market has been greatly improved. As a result both necessity and feasibility of cross-market cooperation have become increasingly pronounced. There will be a greater variety of connectivity of trading, products, market infrastructure and services within and outside the region, and further enhancing internalization of exchanges and the efficiency of cross-market operation.
2. How will SZSE address the changes you mentioned above?
SZSE will adhere to market-oriented principle, rule of law, and internationalization strategy, focus on innovation and technology, so as to take the lead in terms of front-line supervision, market services, technical support, and internal management capabilities. It will continuously enhance market competiveness to create a world-leading capital formation center for innovation and a world-class exchange.
SZSE will further develop its multi-tiered capital market, and build a first-class market system that supports innovation. We will accelerate the ChiNext Market reform in terms of issuance and listing, refinancing, M&A and reorganization, and pilot the registration-based IPO system. Our aim is to improve the overall ability to serve the real economy, particularly technology enterprises, SMEs, and private enterprises, through continuously strengthening the direct financing capacity of the multi-tiered capital market.
SZSE will diversify its financial product supply, and build a first-class global asset management hub. We will take the initiative to serve the increasing demand for asset management in Asia-Pacific market, and continue to diversify financial products. The exchange will also facilitate the introduction of RMB-dominated products and cross-border financial products, promote market connectivity and mutual recognition of products, and accelerate two-way opening up between SZSE and other capital markets.
SZSE will adhere to technology-led development, and embrace the trend of fin-tech. We will strengthen research on progressive, innovative and cutting-edge technologies, promote technology cooperation among exchanges and between exchanges and market institutions, so as to jointly improve the technology development of the whole industry. With focus on artificial intelligence, big-data, 5G, cyberspace and other strategic technologies, the exchange promotes applications of leading technologies such as big-data platform, reg-tech platform, digital asset application platform, and real-time trading, clearing and settlement platform, comprehensively enhancing technological supervision and building itself into a smart exchange.
3. Entering a new decade is not just about looking ahead; it’s also a time to reflect on the past. What most impressed you in the past decade?
The launch of the ChiNext Market in 2009 marked the basic establishment of a multi-tiered capital market in China. In the past decade, the considerable amount of innovative enterprises with excellent performance listed on ChiNext Market formed remarkable clustering effect for innovative capital formation, fueling leap-forward development of SZSE. SZSE ranked No.1 by equities financing, No. 2 by number of IPOs, and No. 3 by trading value during 2017 to 2019. Innovation has been most valuable and enlightening for us from the past decade’s development.
High-tech and innovative enterprises gradually became a prominent part of China’s capital market. As China’s IPO market featured state-owned enterprises and financial institutions decade ago, high-tech and innovative firms have taken the lead thanks to the establishment of ChiNext Market. With market capitalization standing at 6.6 trillion RMB (960 billion USD), ChiNext Market has raised 800 billion RMB (116 billion USD) for nearly 800 companies, making it world second largest capital market serving innovation and entrepreneurship. Based on ChiNext Market, SZSE has developed itself into a symbolic marketplace for China’s new economy sector and commits itself to building a capital formation center for innovation.
Technology advancement has become a major driving force propelling revolution of the exchange industry. New technologies exerted great influence on the ecosystem of capital market by improving information dissemination efficiency, transforming capital market services, promoting inclusive financing, and enhancing competition and cooperation among market participants. SZSE emphasizes on core technologies of market infrastructure, embraces technological revolution, and invests heavily in R&D. The in-house developed SZSE trading system has been upgraded to the fifth generation. SZSE IT infrastructure is built with world-class quality featuring massive scale, high standard and broad connections. We adopt AI, Blockchain, Big Data and Cloud Computing in developing regulation techniques to enhance market supervision and step up market reform and innovation. Let us inject strong momentum into the exchange community and capital market as a whole by strengthening technological cooperation.
[1] Source: https://burton-taylor.com/burton-taylor-releases-annual-financial-market-data-analysis-industry-vendor-rankings/