China’s leader of SEC, Xiao Gang get dismissed after making so many policy missteps contributed to months of volatility and heavy selling in the country’s stock markets. For the past year, the Chinese market went up crazy and investors are enjoy the harvest of money. However when the crisis came since last September, SEC didn’t help keep the market stable and those arbitragers are disturbing the market heavily. For the beginning of 2016, the protection mechanism introduced by SEC created one of the largest catastrophe for China’s equity market. The market crashed almost 20% in 3 days and closed 30 minutes after the market opened in one day.
Xiao Gang’s departure as head of the China Securities Regulatory Commission is expected to be announced “within days,” officials with direct knowledge of the matter said Friday. His replacement is Liu Shiyu, current chairman of the Agricultural Bank of China and a former deputy governor of the Chinese central bank, the officials said.
The replacement of Mr. Xiao comes after months of criticism of his management and of the Chinese government’s stewardship of the world’s second-largest economy. Over the past week, the government has tried to show new resolve to shore up growth that has been flagging while restructuring an economy laden with a glut of debt, housing and excess factory production.
Mr. Xiao, who became commission chief nearly three years ago, has been in the hot seat for months since a soaring run-up in the stock markets turned to a precipitous drop last summer. Policies and other decisions taken by Mr. Xiao have been criticized by traders and other officials for exacerbating the markets turmoil.
Most recently, Mr. Xiao championed the use of a circuit-breaker, a tripwire mechanism that automatically halts trading when benchmark indexes fall quickly to give the markets a cooling-off period. Installed at the start of the year, the circuit-breakers, instead of steadying the markets, added to volatility, contributing to plunges in the Shanghai and Shenzhen exchanges and to gloom on global exchanges.
Defenders of Mr. Xiao point to a record of accomplishment at the commission, while experts on China’s government also note that, like other senior officials, Mr. Xiao had only limited independence, with major decisions being made by Chinese leaders. And someone will actually take all the mistakes when bad time come.
After being named as chairman of the securities regulator in March 2013, Mr. Xiao sought to improve transparency both in markets and at the securities commission. The agency began holding weekly press briefings. He also pushed to reform the cumbersome system for companies to list on exchanges, trying to bring it closer to the Western model.
Under his watch, the Shanghai and Shenzhen markets, which had been largely listless since tanking late last decade, began to rise in mid-2014 and then rocketed up, fueled in part by investors trading on borrowed funds.
Mr. Xiao was a central figure in coordinating a rescue, marshaling the resources of the government and state-owned securities companies to buy up shares. But that effort sputtered for months, belatedly stabilizing the markets in the fall until January’s turmoil and the short-lived circuit-breaker policy.