Beijing has picked the chairman of the Bank of China, Xiao Gang, to replace Guo Shuqing as head of the mainland's securities regulator, at a time when massive reforms are being undertaken to revive the stock market.
BOC said in a statement late last night that Xiao had resigned.
According to sources, the announcement on the change of guard was made during a staff meeting at the China Securities Regulatory Commission yesterday afternoon, four days after the South China Morning Post reported that Guo would be moved laterally to become governor of Shandong province and Xiao was a front runner to fill the vacancy.
The China Securities Journal said yesterday the mainland leadership had decided to designate Xiao as CSRC chairman, without disclosing what position Guo would take.
The reshuffle at the regulatory body came after Guo, a reform-minded technocrat, implemented a series of new policies to overhaul the ailing stock market.
Small investors have long been suffering from the frothy initial public share offerings, fraudulent earnings reports and rampant insider trading that plague the market.
News that Guo would be removed from the CSRC post to become governor of Shandong, replacing Jiang Daming, who was nominated minister of land and resources at the National People's Congress last week, sparked an uproar on the internet, with thousands of investors coming out in support of the departing securities regulatory chief.
Guo, 57, who had been a deputy governor at the central bank and chairman of China Construction Bank, took the helm of the CSRC late in 2011.
His appointment came after a miserable run by the A-share market in 2010 and 2011, when a flood of initial share sales drained liquidity out of existing stocks and left millions of investors high and dry when the new stocks sank one after another below their exaggerated listing prices.
In the past 18 months, Guo suspended approvals for new listings until further reforms of the offering mechanism. He also tightened delisting rules, called for an increase in cash dividend payouts and tried to direct more capital into the market.
Although the market hardly responded to Guo's efforts, he earned the respect and confidence of most institutional and retail investors, who said they believed the reform measures could lead to the healthy growth of the market in the long term.
Chen Gong, a retail investor, said: "He was a good and capable securities regulator and gave us hope although we are still stuck in paper losses. We hope his successor will be as good."
Xiao, 54, is a veteran banker who was also a deputy governor at the central bank, between 1998 and 2003, before becoming the chairman of Bank of China.
During his 10-year tenure at the country's largest foreign- exchange lender, Xiao was credited with leading the bank's expansion.
He was the first boss of a major state-owned bank to publicly question the wild growth of wealth management products, likening them to the shadow banking system.
Xiao won plaudits from investors and bankers for his outspoken style after the recent scandals involving wealth management products.
It is believed that Guo's appointment as governor of Shandong is aimed at grooming him for a more important position in the hierarchy in future.