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OTC set up as a channel for funds
By Feng Jianmin |
February 16, 2012, Thursday
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Print Edition
Print Edition
SHANGHAI yesterday launched an over-the-counter equity market in a bid to allow companies to raise funds in private placement and to facilitate their public listing later.
The Shanghai Equity Exchange will allow institutional investors and any individuals with two years of investment experience and more than 1 million yuan (US$159,000) in capital to trade shares of companies listed on the OTC exchange.
Initially the market size and activities will be limited but the OTC market will be a channel for companies to raise funds through private placement and facilitate their public listing in the future, experts said.
The main purpose of the OTC is to nurture high quality companies and help them list on China's three existing stock exchange boards - the growth enterprise market, the small and medium enterprise board, and the main board.
Li Yue, president of DH Investment, said: "One function of the exchange is to facilitate fund raising through private placement, and the other is to have companies regulate their behavior and establish their name."
Of the first batch of 19 listed companies, two are based in Beijing and the rest are high technology firms in Shanghai. Presently, only six firms are tradable as shares of the remaining 13 companies are locked for one year.
"It (OTC) aims to help the small and medium-sized companies," said Shanghai's Mayor Han Zheng at the launch ceremony, adding that the launch is crucial to Shanghai's goal to become an international financial center.
The OTC exchange will serve companies and investors in Shanghai and the surrounding Yantze River Delta, and then gradually expand to other regions, officials said.
Xu Quan, deputy director of the Shanghai Financial Services Office, said that the entry requirements for the OTC are lower than the stock exchanges in terms of registered capital and length of establishment.
But authorities will "closely inspect the operation, trading, and information disclosure of the listed companies" comply with central government rules, he said.
The Shanghai Equity Exchange will allow institutional investors and any individuals with two years of investment experience and more than 1 million yuan (US$159,000) in capital to trade shares of companies listed on the OTC exchange.
Initially the market size and activities will be limited but the OTC market will be a channel for companies to raise funds through private placement and facilitate their public listing in the future, experts said.
The main purpose of the OTC is to nurture high quality companies and help them list on China's three existing stock exchange boards - the growth enterprise market, the small and medium enterprise board, and the main board.
Li Yue, president of DH Investment, said: "One function of the exchange is to facilitate fund raising through private placement, and the other is to have companies regulate their behavior and establish their name."
Of the first batch of 19 listed companies, two are based in Beijing and the rest are high technology firms in Shanghai. Presently, only six firms are tradable as shares of the remaining 13 companies are locked for one year.
"It (OTC) aims to help the small and medium-sized companies," said Shanghai's Mayor Han Zheng at the launch ceremony, adding that the launch is crucial to Shanghai's goal to become an international financial center.
The OTC exchange will serve companies and investors in Shanghai and the surrounding Yantze River Delta, and then gradually expand to other regions, officials said.
Xu Quan, deputy director of the Shanghai Financial Services Office, said that the entry requirements for the OTC are lower than the stock exchanges in terms of registered capital and length of establishment.
But authorities will "closely inspect the operation, trading, and information disclosure of the listed companies" comply with central government rules, he said.
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