global markets: China sets out move to liberalise IPO rules to streamline listings

China will gradually liberalise rules governing initial public offerings (IPOs) of stocks, expanding a simple registration-based route to market rather than the current system of pre-approval by regulators, according to an amended Securities Law that was approved by parliament on Saturday.

The amended legislation, due to take effect from March 1, removes complex and time-consuming watchdog scrutiny before listings and is designed to streamline listing procedures for companies eager to go public.

But in a move to discourage market manipulation, it also contains provision for heavier punishment on stocks violations and pledges better protection for investors in general.

China’s top securities regulator said last month that the registration-based mechanism for IPOs that underpinned the successful launch of Shanghai’s Nasdaq-style STAR Market will be rolled out on Shenzhen’s start-up board ChiNext.

The new registration-based system must be implemented step by step given complex market structures, state media quoted Cheng Hehong, an official at the China Securities Regulatory Commission (CSRC), as saying.

The CSRC will consider the pace of stock issuance and the market’s ability to cope with such listings, Cheng said.

“We will improve the information disclosure system, strengthen supervision according to law, increase penalties for securities violations, and strive to build a stronger mechanism for protecting investors’ rights and interests,” Cheng said.