CHINA'S long-anticipated international equities board is expected to start trading in the second half of this year. Or to be more exact, this next key piece in Shanghai's strategy to become a global financial hub may be slotted in place as early as the third quarter.

But honestly, are we ready?

The international board will allow certain overseas companies to do yuan-denominated initial public offerings in China for the first time. HSBC, Proctor & Gamble and other multinationals have expressed interest in listing their stocks on the new board.

Despite repeated statements from senior government officials about how important this move will be to the world's second-largest economy, many Chinese investors still fret about one missing ingredient: regulation.

Officials with the Shanghai Stock Exchange have taken great pains to assure the public they are busy developing regulations to cover the operations of the international board. They have been saying that since the idea of the bourse first surfaced a decade ago.

So far, no new regulations or laws have been unveiled. That signals to some investors that foreign company listings will be governed by the same existing rules that operate the Chinese mainland's A-share markets, where insider trading, opaque accounting rules and market manipulation are rife.

For example, A-share firms, whose stocks are denominated in yuan and generally off-limits to foreign investors, are allowed to trade even if their balance sheets have been in the red for years.

Yao Gang, vice chairman of the China Securities Regulatory Commission, admitted in previous interviews that neither China's corporate nor securities laws make any mention of supervision of foreign firms trading on mainland markets. That raises accounting and legal issues that could be worrying for multinationals accustomed to pretty well-defined international rules and standards.

Even if the CSRC suddenly takes on a burst of steam and writes new rules ahead of the debut of the new board, will the regulations be modeled on New York, London or maybe Hong Kong standards?

No one knows.

China's options are hamstrung by the inconvertibility of the yuan. China has taken steps to make the yuan more globally tradable, but it still has a long way to go.

The mainland's stock markets are far from "mature." Chinese officials are fond of describing them as markets "with Chinese characteristics." Those characteristics may be none too attractive to foreign companies used to seeing the label attached to every step the country has taken in the last three decades.

It's a term hard to translate into English. When problems arise, it sort of implies that there's no reason for concern because China is still on a steep learning curve.

But who should pay for the costs of that learning, especially when lessons are learned the hard way and can cost victims a lot of time and money?

This is exactly what concerns many investors, and they have every right to seek clarification.

Will the international board be another ATM machine draining Chinese investors' money, just like ChiNext, a Nasdaq-style board, did?

China's stock markets turned in a poor performance last year. The benchmark Shanghai Composite Index tumbled 14.3 percent last year, making it the third-worst market in the world.

At the same time, the Shanghai market led global markets in initial public offerings, with 349 newly-listed companies raising nearly 490 billion yuan (US$74 billion).

This year more than 400 companies are expected to list, according to Ping An Securities. International consulting firm Ernst & Young estimates the IPOs will raise more than 600 billion yuan.

In the first two months of this year alone, banks already listed on the Shanghai market have unveiled share-sale plans to raise 200 billion yuan.

The companies should not bear the blame. After all, they are just profit-oriented enterprises doing what they do best: making money. Which among them can resist the temptation when access to funds is so handy?

Well-known foreign firms, the main participants who are targeted for the international board, are no saints either, of course. They may behave somewhat admirably in markets where the rules are clearly drawn, but there's nothing to stop them getting involved in market shenanigans if no boundaries are set.

Addressing unreasonably high IPO prices that have marked many listings in Shanghai, Geng Liang, chairman of the Shanghai bourse, said foreign firms wanting to list on the new international board should set prices below those of their overseas traded stocks.

But it remains unclear what the exchange will do if a foreign firm should attempt to ramp up its share price overseas in order to nail a higher IPO price in China.

That has led some Chinese researchers to argue that the debut of the international board should be restricted to Chinese firms already listed in overseas markets.

Recent history makes that idea a bit unsettling for Chinese investors.

PetroChina Co, which was listed in Hong Kong and New York, began trading on the mainland in November 2007 at 48.60 yuan a share, surging 191 percent from its IPO price. The company raised 66.8 billion yuan in Shanghai by selling 4 billion A shares.

But 166 days later, the biggest Chinese oil producer fell through its 16.70 yuan IPO price. It closed at 11.69 yuan yesterday.

Still, many analysts are optimistic about the future of the international board. They argue that letting world-class companies sell shares in China will help Chinese counterparts learn how to play the global game and will raise the stature and sophistication of domestic bourses.

But the CSRC definitely needs to prepare a Plan B in case the opposite happens and foreign firms instead learn how to master local market tricks.

Despite all the uncertainties, enthusiasm about the international board is spreading.

Twenty-seven policy advisors in Shenzhen, home of the mainland's smaller stock market in Guangdong Province, said in a joint proposal in January that the southern city also needs to have an international board to boost the local financial industry.

Is this enthusiasm with Chinese characteristics?