Xiao Gang, a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), said China's capital market has made remarkable progress in reform and opening-up but comprehensive efforts are needed to upgrade securities law-enforcement and judicial system.

The former chairman of the China Securities Regulatory Commission made the remarks when interviewed about his takeaway from a guideline to clamp down on illegal activities in the securities market issued by the General Office of the Communist Party of China Central Committee and the General Office of the State Council on July 6.

Xiao said capital markets are a lot about fame, fortune and profits but essentially the rule of law should form their bedrock. China has been committed to building a comprehensive and adequate system of legal liability that now consists of administrative law-enforcement, civil compensation and criminal punishment.

More efforts are needed to address barriers such as the shortcomings in the institutional design, the low cost of breaking the law and usually lengthy legislative process, which can hinder effective response to illegal actions such as financial fraud, insider trading, and market manipulation, according to Xiao.

He suggested a "top-level design" approach coupled with systematic and goal-orientated measures in order to promote the high-quality development of the capital market.

In Xiao's view the guideline's zero-tolerance policy for illegal behaviors underlines a pressing need to strengthen administrative enforcement and criminal remedies and to coordinate moves of central and regional governments to maintain an open, fair and equitable market environment.

He suggested measures such as enhancing sharing information and aligning evidence standards to help improve efficiency in dealing with cases.

To build up the integrity of the capital market, it's necessary to improve laws and regulations, adopt modern technologies and means to form the database of business credit records, and support law-enforcement by combining reward or punishment measures, said Xiao.

Noting the risks in the cross-border data flow, Xiao said that as China further opens its capital markets and cross-border investment rises, efforts are needed to increase international cooperation, formulate judicial interpretations and supporting rules for the extraterritorial application of the Securities Law, improve regulation of cross-border data flows, and promote mutual recognition and enforcement of judicial decisions between China and other countries and regions.