The registration-based IPO system was first adopted by the tech-focused STAR Market in 2019, and was broadened to start-up board ChiNext in 2020 and the Beijing Stock Exchange in 2021. Now it will also apply to the main boards in Shanghai and Shenzhen, the homes of China's blue-chip stocks, the China Securities Regulatory Commission said in a statement.
The essence of this IPO reform is to "give the right of choice to the market," and make IPOs "more standardized, transparent and predictable," the commission said.
Unlike the approval-based system, where the listing of a company requires the approval of the commission, the new system empowers bourses to review IPO applications. The commission is mainly responsible for making sure new listings are in line with national industrial policies.
Compared with the approval-based system, the new mechanism not only changes the body of reviews, but also places emphasis on information disclosure.
"This is a major leap forward in China's capital market reform," said Dong Dengxin, a researcher with Wuhan University of Science and Technology.
The commission dismissed concerns that the new system will lower the quality of listed firms, pledging stringent quality control and supervision.
The commission will crack down on illegal stock market activities, and will investigate and punish acts such as the fraudulent issuance of securities and financial fraud, it said.
The commission also vowed to keep the capital market running steadily, and to encourage medium and long-term funds such as social security funds, insurance funds and enterprise annuities to increase their investment in the capital market.
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Above article is from China Daily