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STL Professor Nitzan Shilon Advocates Market Institutions for a Successful Opening Up of China’s Financial Markets

The recent Lujiazui Forum in Shanghai brought together global financial leaders, government officials, and scholars to discuss strategies for opening up China's securities market. Among the distinguished panelists, STL Professor Nitzan Shilon emerged as a notable voice advocating for the development of market institutions to complement financial regulation.

Co-hosted by influential financial institutions, including the Shanghai People's Government, the People's Bank of China, the National Financial Regulatory Administration, and the China Securities Regulatory Commission, the Lujiazui Forum has become an authoritative financial forum and a premium international financial dialogue platformfor shaping international financial cooperation and market reforms.

In the last forum, over 500 people attended the distinguished panel, featuring key figures such as Presidents of the Shanghai High People’s Court and the Shanghai Financial Court, Justices from the People’s Republic of China and the Singapore High Court, an Executive Vice President of the People’s Bank of China, an Executive Dean at the school of finance of Fudan University, a former senior advisor of the US Federal Reserve Board, and STL Professor Nitzan Shilon, addressed strategies for the opening-up of China's securities market.

While many speakers underscored the importance of financial regulation in facilitating the opening of China’s financial markets, Professor Shilon brought attention to the complementary role of market institutions. He stressed that, while legal rules are crucial for protecting market participants and attracting foreign investors, equal emphasis should be placed on developing and supporting market institutions. Professor Shilon contended that such market institutions can protect public investors, thereby increasing demand for Chinese financial securities. He proposed that to create a robust environment for market forces China should extend its openness not only to foreign investors but also to other significant global corporate governance actors, including proxy advisory firms, risk assessors, and index providers.

In a cautionary note, Professor Shilon highlighted the potential chilling effect of excessive regulation on the development of these vital market institutions. Balancing regulatory oversight with a conducive environment for market forces and institutions, he argued, is essential for sustaining a dynamic financial ecosystem.

Professor Nitzan Shilon's insights contribute to the ongoing dialogue on China's financial market reforms, advocating for a comprehensive approach that includes both regulatory frameworks and the development of robust market institutions. As China continues to prioritize the opening-up of its financial markets, Professor Shilon's recommendations may play a pivotal role in shaping a more resilient and investor-friendly financial landscape.

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