* Latest step by securities regulator to take on market ills
* New bureau to draft rules, improve investor education
* CSRC head Guo Shuqing moving to speed up reform
* Retail investors account for 80 pct of China stock trading
(Adds more details, background)
SHANGHAI, Jan 11 China's securities
regulator has set up an "investor protection bureau" to
safeguard investors' interests in the world's third-largest
stock market, as it takes on rampant wrongdoing that has eroded
Guo Shuqing, the newly-appointed chairman of the China
Securities Regulatory Commission (CSRC), has wasted no time in
ramping up efforts to clean up the market, which has been rife
with insider trading and market manipulation.
The newly-established bureau under the CSRC, which has
already started operations, will draft and review laws and
regulations that protect investors, the official Xinhua News
Agency reported, citing a CSRC news release.
It will also improve investor education and streamline the
process of accepting complaints by investors, Xinhua said.
The launch of the bureau and other steps by the CSRC in the
past few months are a response to a string of stock market
scandals in recent years that have hurt domestic investors,
including pump-and-dump schemes and insider trading.
China's stock market is already the world's third-largest,
after the United and Japan, but it is still dominated by retail
investors, who account for about 80 percent of trading and many
of whom trade more on rumour than fundamentals.
The main index of Shanghai-listed stocks fell 22 percent
last year despite strong economic and corporate earnings growth,
underscoring the lack of confidence in the market.
Guo, former chairman of China Construction Bank,
has taken a series of steps since taking office last October to
clean up the industry, including arresting executives accused of
insider trading and strengthening public companies' disclosure
He has also vowed to press on with reforms to clean up
initial public offerings, which have come under scrutiny for
their often high valuations that have led to subsequent falls in
China has more than 72 million retail investors, accounting
for 11 percent of the country's urban population, and 80 percent
of the investors only own stocks of market value less than
100,000 yuan ($15,800), according to the CSRC.
Such investors have natural disadvantages in obtaining
market information and professional ability, making them
vulnerable to malpractice such as insider trading and
pump-and-dump schemes, known as "stir-frying" of stocks in
The investor protection bureau will also assist in the
establishment of a system for seeking redress for investors who
have had their interests violated, and step up cooperation with
similar bodies in other countries, Xinhua said.
($1 = 6.3150 Chinese yuan)
(Reporting by Samuel Shen and Jason Subler)