National People's Congress Deputy and Peking University Boya Distinguished Professor Tian Xuan: Market-oriented reforms promote balanced investment and financing; gradually extend A-share trading hours

Securities Times Reporter Guo Bohao

The reform of the independent director system has entered its third year, with performance and deep-seated issues coexisting. Topics such as deepening comprehensive reforms of capital market investment and financing, and optimizing A-share trading systems, have become hot topics of current concern among all parties in the capital market.

Recently, Tian Xuan, a delegate to the National People’s Congress and a distinguished professor at Peking University, told Securities Times in an exclusive interview that market-oriented reforms should promote coordinated balance at both ends of investment and financing. He also said that the revision of the Company Law should be used as an opportunity to strengthen the foundation for independent directors to perform their duties, and that a phased, prudent approach should be taken to extend trading hours on the A-share market, helping China’s capital market achieve high-quality development and high-level two-way opening.

Regarding the core direction of comprehensive reforms in capital market investment and financing, Tian Xuan stated that the current reform has entered deep water, and the core should focus on systematically advancing four major goals: improving institutional inclusiveness, balancing investment and financing, serving the real economy, and preventing and resolving risks.

Tian Xuan proposed to continue deepening market-oriented reforms of issuance and delisting systems, further enhancing the inclusiveness of the IPO registration system, accurately matching the financing needs of tech innovation enterprises, small and medium-sized enterprises, and private enterprises, while strictly enforcing delisting, improving normalized and diversified delisting mechanisms, and promoting a market ecosystem of “entry and exit, survival of the fittest,” thereby fundamentally improving the quality of listed companies.

In response to the highly关注 of the market on balancing investment and financing, Tian Xuan suggested that efforts should be coordinated in two areas. First, regulate the financing behavior of listed companies, curb phenomena such as over-financing and arbitrage in private placements, and guide financing funds accurately toward the real economy. Second, continue to cultivate long-term institutional investors, strengthen professional institutions such as social security funds, insurance funds, and public funds, optimize the investor structure, and enhance the long-term investment value of the market.

At the same time, efforts should be made to promote high-level two-way opening of the capital market, further align with international trading rules and regulatory standards, optimize connectivity mechanisms, expand the inclusion of A-shares in international indices, attract more long-term overseas capital, and simultaneously strengthen the protection of the legal rights of small and medium investors, establish diversified compensation mechanisms, significantly increase the cost of violations in the capital market, and build a comprehensive risk prevention and control system.

The reform of the independent director system is a key measure to improve corporate governance. Regarding the current status of performance over the past three years of reform, Tian Xuan admitted that while the ability and awareness of independent directors have visibly improved, three core issues still restrict the effectiveness of the system. First, the imbalance of rights and responsibilities— the current situation of “emphasizing accountability and under-protecting” has not fundamentally changed; the responsibilities of independent and non-independent directors are not differentiated, and information access and independent verification methods are limited. Second, the nomination and management process is unstandardized, often dominated by controlling shareholders or management, with insufficient independence, no unified standards for qualification, and uneven professional capabilities. Third, regulatory and self-discipline efforts lack coordination, mainly relying on post-event administrative accountability, with self-discipline management lacking authoritative support, and the performance evaluation system is still imperfect.

Tian Xuan said that the revision of the Company Law is a critical opportunity to improve the independent director system, focusing on resolving three major issues: unclear institutional positioning, ambiguous rights and responsibilities boundaries, and lack of legal basis for performance guarantees. He suggested clarifying the statutory requirements for establishing independent directors in listed companies, including the proportion of independent directors and professional background thresholds, to eliminate superficial “formal” appointments; defining “joint but distinct” responsibilities, and reasonably assigning responsibilities based on factors such as information access, engagement level, and subjective fault, while clarifying exemption circumstances to reduce concerns about performance; legally granting independent directors rights such as independent information access and the power to hire intermediaries, and clarifying the obligations of listed companies to ensure performance. Additionally, he recommended leaving space in the law for a national independent director association guided by the CSRC, to supplement regulatory gaps through industry self-discipline, establish unified qualification and training systems, and improve responsibility protection and risk mitigation mechanisms for independent directors.

Regarding the hotly discussed topic of extending trading hours on the A-share market, Tian Xuan pointed out that extending trading hours is an inevitable choice for deepening two-way opening and expanding market size. It can help the Shanghai and Shenzhen stock exchanges gain global pricing power for Chinese listed companies, improve asset pricing efficiency, and alleviate information asymmetry across markets, better protecting the rights and interests of small and medium investors.

Tian Xuan emphasized that extending trading hours should be implemented gradually and not in a one-size-fits-all manner. He proposed a three-step approach: first, extend the afternoon closing time to 4:00 PM to synchronize with the Hong Kong market; second, extend the morning trading halt to 12:00 PM, increasing daily trading hours to 5.5 hours; third, depending on market adaptation, consider opening earlier to increase overlap with Asia-Pacific markets. Meanwhile, measures such as improving trading rules for new trading hours, strengthening digital and intelligent regulation, upgrading intermediary services, enhancing investor education, and establishing cross-market emergency coordination mechanisms should be implemented to control potential risks within manageable limits, balancing market activity and stability.