Arbitration is widely used in the United Kingdom, United States and the Hong Kong Special Administrative Region. More than 80 percent of the financial cases reach settlements in some jurisdictions, according to the CSRC.

Restart of IPOs

Protecting small investors

"The old solution was to punish or intimidate violators with a fine, but that didn't help investors who'd lost money," said Xiao.

Liu said that by introducing arbitration, regulatory efficiency will be improved, and those who break the law will have a second chance to "make things right".

"But they still have to admit their wrongdoing and settle with other investors in exchange for a lighter punishment from the regulator.

"The commission is testing the waters and collecting investors' responses to the article," said Liu.

Xiao proposed that trials of the system be held before the official implementation of an arbitration system.

The amendment of the Securities Law, which is to start this year, has drawn intense market attention. How to protect investors and uphold market efficiency as well as fairness are major issues. Experts say three drafts are expected before the amendments are finally passed.

Dai Tian contributed to this story.

 

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