When the government is simultaneously the owner and regulator of the securities market, the evolution of securities market regulation follows a path of compulsory institutional change. China’s government authorities have played a dual role in this process by acting both as the securities market regulator and the controlling owner of the stock exchanges. This paper uses the evolution of China’s securities market regulation from 1980 to 2007 to illustrate this theoretical framework. It provides unique evidence of how securities regulation evolves in response to government direction and supervision if the government is both the owner and the regulator of the securities market.