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Professor Nitzan Shilon Advocates Developing China’s Market Institutions to Complement its Financial Regulation

At the 14th Shanghai Lujiazui Forum, one of China’s premium international financial dialogue platforms, Professor Nitzan Shilon at the Peking University School of Transnational Law has advocated for the development of China’s market institutions to complement its financial regulation.

Professor Shilon has stressed that although legal rules are crucial for protecting market participants from potential opportunistic behavior by controlling shareholders and management, equal emphasis should be placed on developing and supporting market institutions, as they are able to protect public investors in unique ways that are sometimes advantageous to regulation. He has also emphasized that, considering its current financial landscape, China should place greater importance on fostering market institutions in order to succeed in the opening up of its financial markets.

He has specifically 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.

Professor Shilon has also cautioned from 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 has argued, is essential for sustaining a dynamic financial ecosystem.

Over 500 distinguished guests have attended Professor Shilon speech. The panel, which addressed strategies for the opening-up of China's securities market, also includedkey 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, and a former senior advisor of the US Federal Reserve Board.

Professor Nitzan Shilon's insights, advocating for a comprehensive approach that includes both regulatory frameworks and the development of robust market institutions, contribute to the ongoing dialogue on China's financial market reforms. 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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