Ultimate magazine theme for WordPress.

China begins implementing a registration-based IPO system

Shanghai Stock Exchange Photo: CFP

China’s registration-based IPO system is progressing at an accelerated pace, about a month after the country announced detailed institutional reform mechanisms and regulations.

Industry observers said the first batch of companies under the new registration-based IPO program is expected to be listed on the Main Board as early as April.

According to the two exchanges, a total of 16 companies had filed registration documents with the Shanghai Stock Exchange and the Shenzhen Stock Exchange as of Thursday.

Separately, 10 companies have had their IPOs approved by the China Securities Regulatory Commission (CSRC), according to the securities regulator’s website Thursday.

Chen Li, chief economist at Chuancai Securities, told the Global Times on Sunday that the first batch of companies under the registration-based IPO plan is expected to go public in early April.

“China is accelerating the pace of implementing the registration-based IPO system, but caution is still a priority when it comes to motherboard listings,” Chen said, adding that the first group of companies to go public , must ensure their standardization when preparing and disclosing documents.

“Rather than relaxing information disclosure requirements, the system imposes stricter standards,” Chen said.

Online sales will also start shortly. To ensure smooth business development related to the registration-based IPO program, the Shanghai Stock Exchange and Shenzhen Stock Exchange, together with China Securities Depository and Clearing Corp and China Securities Finance Co., organized the first network test on Saturday.

The test was conducted to simulate processes of trading stocks and depositary receipts on the Shanghai and Shenzhen stock exchanges, including entrusted declarations, transaction returns, market reception, and clearing and settlement, analysts say.

The country’s broking system is ready to launch the registration-based IPO system and will continue to find and solve problems during the testing process, according to the investment firms.

China introduced the new listing system on February 17, a milestone in the development of China’s capital market reform.

The registration-based IPO system has previously been practiced at the Shanghai Stock Exchange’s STAR Board, the Shenzhen Stock Exchange’s ChiNext Market and the Beijing Stock Exchange.

“The biggest impact of the new registration system is that the market ecosystem has changed and investors will pay more attention to the fundamentals of companies instead of seeking shell companies used to going public at minimal cost,” Yang said Delong, chief economist at Das, told the Global Times at the Shenzhen-based First Seafront Fund Management Co.

As more shares are listed, the competition between companies will become fiercer, and survival of the fittest will be achieved, Yang said.

China’s stock market is the second largest in the world by market capitalization. In February, the number of stock market investors in China rose to more than 1.67 million, the latest data from the China Securities Depository and Clearing Corp showed.

Comments are closed.

%d bloggers like this: