By Liyang Jin 

Vice President of Shenzhen Stock Exchange 

It is my great honor to attend International Forum for China Financial Inclusion. To be honest, it was nothing to share if I took part in this forum 5 years ago, since the target of financial inclusion was to effectively provide financial services to the grass-roots society, especially low-income people. On the contrary, the capital market, especially in China, was basically keeping open in recent 20 years. China has long been served enterprises with large scale and better profitability and prospect. Therefore, financial inclusion was ‘difficult to achieve’ for me a couple of years ago. But through the reform and innovation of capital market, financial inclusion is gradually accepted by the market and we can contribute to it now. 

I. Expend breadth and depth of service in capital market, and efficiently execute the concept of financial inclusion

Firstly, the establishment of multi-level capital market including main board ,SMEs board, GEM (Growth Enterprise Market), new third, forth and fifth board, as well as the differential development of each level, has laid an organization foundation to expend the width of services in capital market. It has already been accessible to the enterprises with more diversified business model and larger difference in scale. 

In terms of the policy, for example, the threshold for going public in GEM is remarkably lower than that in the main board and SMEs board. It is firstly evidenced by the fact that demand for continuous growth has been canceled. The first criteria is the company consistently profitable in recent two years and net profit is not lower than 10 million Yuan (‘continuous growth’ is not required); the second criteria is related to profit in the last year (‘net profit is higher than 5 million Yuan is not required). The operating income is no less than 50 million Yuan (no need to ‘keep the growth ratio up to 30% in recent two years’). Second is to release industry access system and not restrict on the intangible asset. 

On the level of market self-selection, about 93% of the GEM members are high-tech enterprises and 95% of those are private enterprises. Hence the GEM becomes a landmark of innovation and entrepreneurship. While the percentages of high-tech enterprises and private enterprises in SMEs board are 74% and 81% respectively, leading it to an emblematic listing location of Chinese leading firms in sub-industry. 

By July 30^th in 2015, the numbers of listed companies in Shenzhen mainboard, SMEs board and GEM are 480, 767 and 484 respectively. The total numbers of companies in the SMEs board and GEM is 2.6 times than that in the mainboard. While in the 11 fourth-board market permitted by Shenzhen Stock Exchange， getting share through Shenzhen Securities Information Co., Ltd., there are about 2500 listed companies and 15000 display corporations. A pyramid construction has been established for the capital market, which means the concentration has been shifting towards the bottom and more inclusive environment for entrepreneurial innovation has been built.

In terms of proactive service, the capital market is providing more products and services. In the case of Shenzhen Stock Exchange, it has built a life cycle service chain from originality to IPO for the start-up companies, with the combination of fixed-income products, roadshow and listing services.

Talking about the fixed income product, Shenzhen Stock Exchange has established a sophisticated product system including asset-backed securities, Public Offering Bond (large and small Public Offering), Private Placement Bond and Pledge-style Repo. It is a mature specialized service for Shenzhen Stock Exchange to support the development of microcredit through asset securitization. The special plan of microcredit released by Shenzhen Stock Exchange including Ali loan (No.1 to 10), CFPA microfinance, Jingtong microfinance, and Ant Financial etc. Thereinto, the micro-finance securitization scheme issued by CFPA is non-for profit, whose total amount of the first phase in 2014 reached 500 million Yuan, was the first asset securitization product under filing system as well as the first agricultural-related welfare microcredit securitization product. From the beginning of 2015 to August 31^st, the amount of microcredit securitization products released by Shenzhen Stock Exchange has already reached 4093 million Yuan. 

Meanwhile, with the pass of new ‘Regulation on the issue and management of corporate bond’ in 2015, the main issue entity of corporate bond market expanded and the review process was simplified. Firstly, the main issue entity now covers all legal persons under corporate system, in comparison with that of listed company only before, consisting joint-stock company and limited liability company (except the companies supported by local government). In terms of the non-public placement, there is no rigid limitation on the net asset and the ratio of the accumulated bond balance to net asset etc. Secondly, parts of auditing affairs can be done in the Stock Exchange, meanwhile the sponsor system and PORC system have both been canceled. It means that the large public offering still requires approval from CSRC, while the small public offering need the prequalification of the Stock Exchange and also the approval from CSRC. The exchange should verify the precondition for the transfer before the private placement is issued and the Securities Association should put it on records later. The time of auditing for small public offering should not be exceed 20 workdays, and the auditing of private placement should be within 10 workdays. From the start of year 2015 to August 31th, there have been, in the Shenzhen Stock Exchange, 1.592 billion Yuan of private placement issued by 20 companies, 2.765 billion Yuan of small public offering via 22 companies and 1.652 billion Yuan of large public offering released by 27 companies, which means a multilayer bond market is taking shape. The scale of stock and bond is now balanced, considering the center was shifted to the stock before. A new stage for entrepreneurial and innovative enterprises supported by Shenzhen Stock Exchange is coming. 

In order to bring along more financial associations to serve entrepreneurial and innovative enterprises, Shenzhen Stock Exchange even expands roadshow to unlisted SMEs. Although roadshow is a kind of soft service, it is the hinge in the connection between investment and financing. To get accreditation of financial system, enterprise has to show themselves and obtain credit certification through roadshow. The long history of Shenzhen Stock Exchange serving the listed companies for roadshow makes it experienced in activity organization and rich of resources on investors. In October of 2014, Shenzhen Stock Exchange cooperated with Torch High Technology Industry Development Center, Ministry of Science & Technology, offering the unlisted SMEs roadshow services under the view of ‘Internet Plus’. We established ‘China Hi-tech Zone Technology Financial Information Service Platform’ as online service, and built public halls for roadshow together with local high-tech zones, Financial Offices, regional stock markets etc. Through the online and offline networks, on the one hand, we gather thousands of investment associations nationwide such as PE/VEs and listed companies. On the other hand, by holding circuit roadshow, normalized roadshow and project display with local departments, we collect technological innovation-based enterprises with financial demand and offer them free roadshow services both online and offline. All the information about investment preference and value-added service of investment institutions is stored on the platform, as well as roadshow, display and credit inquiry of companies. With whole set of regulation, the platform offers the both sides in searching, directional push, business card delivering, online communication and other services, in order to improve the matching efficiency and the probability and speed for companies to get financing fund. By July 28^th in 2015, ‘China Hi-tech Zone Technology Financial Information Service Platform’ has held 20 roadshows in 11 districts over the nation, and roadshow has initially been normalized in Beijing, Shenzhen and Shandong. The total number of financing fund in successive cases and prospective ones has reached 500 million Yuan.

In the perspective of financial inclusion, via the Platform, the innovative enterprises can access to any investment associations nationwide taking no account of time limitation either zoning restriction within 7x24. The platform makes it possible for the entrepreneurial innovation enterprises to use national resources with lower cost and higher efficiency, especially for those in underdeveloped areas, which do really promote the equalization and generalization in the connection of investment and financing. 

II. Capital market: the important accelerator of financial inclusion 

To establish ‘a financial system that can efficiently and omni-directionally provide services to all social strata and groups, especially the low-incomes’, is the ultimate goal of financial inclusion. Currently, the main subject of the capital market is entrepreneurial innovation enterprise, which means the low-income groups still beyond the reach. However, the capital market can, apart from serve the entrepreneurial innovation enterprises, accelerate the development of other inclusive-finance institution with the more detailed level of the market and more abundant of services. This is the reason why the capital market is the important accelerator of inclusive-finance system. 

The acceleration effect of capital market reflects on four aspects: product, organization, system and infrastructure. 

The product. By offering the circulation platform for the products of inclusive-finance organizations, capital market accelerates the speed of fund flow, which would be helpful to unleash the potential in services. The microcredit securitization mentioned before is just a typical case. According to the international experience, the development space of asset securitization and related derivatives remains great. Wang Xin，the governor of NanChang Center Branch of the People’s Bank of China, and experts from CASS such as Zou Xiaomei, Zhang Ming and Gao Bei (2015), each of who wrote papers about how the German KFW bank operated the securitization platform funded by the government as well as the synergetic development between securitization and CDS(Credit Default Swap). All these experience is worthy learning on the basis of our actual situation.

The organization. The MSBs, microcreidt companies and others of such kind organization can go public from the experience of developed countries. To develop the financial inclusion, capital market should support a group of professional inclusive financial institutions, focusing on the microfinance, three rural issues and differential development, to go public. Then the served subject can be expended to general UMKMs. As return, the listed inclusive- finance associations can not only replenish capital, but also be helpful to its normative development. The nonstandard operating is a common problem in UMKMs. If the organizations that serves the UMKMs are also nonstandard, the situation would be worse. 

The system. Currently, microcredit is the core business of financial inclusion. Microcredit originates from fund demand of necessity entrepreneurship for the low-income individual, while the angel investment, Equity-based crowd-funding and privately raised company bonds that relates to the capital market mainly serve the maker entrepreneurship. The maker entrepreneurship can provide lots of employments and opportunities to increase social condition just as manufacturing entrepreneurship can do. Both of them are the footstones for long-term stable development of economy society. In addition, the popularization of maker entrepreneurship is also beneficial to the extensive permeation and deep development of emerging industry. It would take a more important position after the mitigation of poverty problem. As we can foresee, the capital market can make another way for the financial inclusion and accelerate the development of the whole system, via taking full advantages of its superiority on serving making entrepreneurship. 

It is worth for us to do the further research on the methods to comprehensively coordinate the product, the organization and the system, as well as to perform the acceleration effect on the development of financial inclusion. For all these years, we found the situation for the capital market to support the financial inclusion has been getting better, by the reform and innovation of itself. Of course, it is still a long way requiring exploring together and reference to the advanced experience. Nevertheless, we do firmly believe that, with the unremitting efforts on financial inclusion of everybody, we can create a better economic society.