China to pre-empt further stock market volatility by creating a single 'super-regulator'

Lessons learnt from poor inter agency co-operation during this year’s stock market crash are likely to lead to a move to bring together insurance, securities and banking regulators as part of a single commission.

Although the prospect of a unified Chinese financial supervisory commission has been on the table for a number of years, it had yet to gain any real traction. However, after this year’s stock market crash was blamed in part on poor inter-agency coordination, Beijing began internal discussions about merging the three main financial regulators as part of a broader goal to reform China's markets.

The three regulatory agencies are the China Securities Regulatory Commission, the China Banking Regulatory Commission and the China Insurance Regulatory Commission. Currently, they all operate independently, but there are inherent problems in attempting to differentiate between securities, insurance and asset management companies and inevitably some degree of overlap.

Reports suggest Beijing is looking at Britain's regulatory set-up as a model, among other options, although at this point it's not clear whether the People's Bank of China (PBOC), the country's central bank, would be part of any new super-regulatory body. While no final decision has been taken on the specifics, momentum for reform is building and will accelerate in the coming year.