China's decision to merge banking and insurance regulators underscores policymakers' intention to address a financial regulatory vacuum and enhance supervision through a more unified approach, financial experts said on Wednesday.

At the same time, their decision to keep the securities regulator independent boosts the status of the securities market in serving the economy, they said.

The decisions, if approved by the country's top legislature, would end the framework consisting of the People's Bank of China and three national financial watchdogs－the banking, securities and insurance regulatory commissions－that has governed the country's financial regulation for the past 15 years.

Financial experts said the central bank will likely lead future financial regulation on the macro level and will be responsible for drafting key policies and rules while the two remaining commissions will focus on policy execution and market activity supervision.

Detailed arrangements will be rolled out soon to clarify the main responsibilities and functions of the central bank and the two commissions. They are expected to offer more insights into the PBOC's role and its relationship with two commissions as well as the Financial Stability and Development Committee, the interagency financial coordinator created last November.

Wang Gang, a senior financial researcher at the Development Research Center of the State Council, said it is crucial for the top policymakers to clarify the role and function of the country's framework for mitigating risk to the financial system.

Wang said the proposed framework of "PBOC plus two commissions" will be a stable structure in the short to medium term, but further adjustments may be introduced.

Meanwhile, experts said keeping the securities regulator as an independent entity likely means that the government intends to differentiate its functions from that of the banking and insurance regulator and to boost the role of the securities market in supporting economic growth and ensuring fair market practice.

Lou Jiwei, head of the National Council for Social Security Fund and former finance minister, said that the merger of the banking and insurance regulators made sense because of the similarities of their regulations emphasizing capital adequacy and solvency requirements for financial institutions.

But the role of the securities watchdog is different－it will focus more on supervision of information disclosures and prevention of illegal activities such as financial fraud to protect investors' interests, Lou said.

On Wednesday, the China Securities Regulatory Commission imposed a penalty of about 5.5 billion yuan ($871 million) on Beibadao Group, a Chinese company, for market manipulation. It was the largest penalty ever handed out by the securities watchdog.

The dramatic stock market crash in 2015 exposed serious regulatory voids and shortcomings in the country's financial regulation, which prompted policymakers to ponder major financial reforms.

The proposed financial regulatory reform, which is part of the country's plan for its biggest Cabinet revamp in years, has received positive responses from the market as it is seen as the government's latest effort to increase interagency coordination and to build a more comprehensive regulatory framework that can address risks.

"A more unified approach could enhance regulatory oversight and help to limit contagion risks, which would be positive for the long-term stability of the financial system," global credit rating agency Fitch Ratings said in a research note.