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Lawmakers approve stock listing reform
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CHINESE lawmakers yesterday approved a State Council proposal to reform stock listings at the end of a bimonthly legislative session which began last Monday in Beijing.
The decision by the National People’s Congress Standing Committee will take effect from March 1.
The State Council, or Cabinet, will then have the power to change the listing system on the Shanghai and Shenzhen bourses from approval-based to registration-based any time within the next two years.
Under the current system, new shares are subject to approval by the China Securities Regulatory Commission, which controls both the timing and price. The new system will allow the bourses to take over initial public offerings approval and clear the backlog of companies on the waiting list. Details of the switch are to be worked out by the State Council, which will submit progress reports.
Stock market regulators must now enhance post-registration supervision and protect investors.
Markets have been anticipating the change for some time now. The switch was a highlight of the CSRC annual conference this year and to get the authority for the switch was listed by the State Council as a major task for 2015. The process was delayed due to the summer’s capital market volatility, which wiped nearly US$5 trillion off the market value between June and August.
On November 10, President Xi Jinping stressed the creation of a stock market with sound financing, regulation and investor protection at a top leadership meeting.
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