Regions

Head of China Securities Regulatory Comission To Step Down

January 18
6:27 PM 2016

After his failure inimplementing circuit breaker system to limit losses in stock market, head of CSRC Xiao Gang offered his resignation. The system failed to live up to expectation and causing a global market panic in the first day of trading in 2016.

CSRC announced that started in 2016, circuit breaker mechanism is implemented as a preventive measure to stop the trading when stock price decline too fast. Unfortunately, things did not work as planned, because on the very first trading day of the year, Chinese market was halted and creating a panic. Again on January 6, Chinese stock markets were halted in just half hour after trade opening.

This second sudden halt in a week triggered a global market panic. As a result, CSRC had to deactivate the circuit breaker system in order to smooth the trading process on January 7. Soon after, head of CSRC, Xiao Gang was rumored to step down, but CSRC denied the rumor.

Nevertheless, Reuters reported its source said Xiao Gang offered his resignation last week. He handed his resignation after a perceived mismanagement wiped more than $5 trillion off the value of the Shanghai and Shenzhen stock markets since they peaked last June.

The source said that Chinese Communist party leadership was unhappy about Xiao Gang decision in circuit breaker mechanism, which was blamed for exacerbating a sharp sell-off. CSRC has not issued any official statement regarding Xiao Gang resignation.

Xiao Gang made quite a controversial statement regarding the trading halt on Saturday,"The abnormal stock market volatility has revealed an immature market, inexperienced investors, an imperfect trading system and inappropriate supervision mechanisms."

His statement drew a wave of criticism. According to Wall Street Journal, many users in Weibo, Chinese microblog denounce his comment. Some even said, "The speech didn't mention one word of reflection or investigation into who should be held responsible."

Another comment said, "How can you call investors immature? Stock investors are all profit-driven."

Following an interview with Hong Kong's Phoenix TV in 2012, public questioned his capability to lead a governing body of financial market. In which he admitted to his terrible skills in math. However, he was appointed a head of China Securities Regulatory Commission 2013, after finishing his term as a chairman of Bank of China Ltd for 10 years.

Meanwhile, China's stock market has not recovered completely yet. As Xinhua reported that on Friday closing, market value of the Shanghai and Shenzhen stock exchange plummeted to 42.74 trillion yuan ($6.5 trillion), down nearly 9% from the previous week.

Xiao Gang was rumored to offer his resignation last week as the head of CSRC last week. However, up to now, there have been no official statement from CSRC regarding Xiao Gang's resignation and his replacement.

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