China: New IPO System to Promote Reforms across The Entire A-Share Market

China: New IPO System to Promote Reforms across The Entire A-Share Market

Implementation of the registration-based initial public offering mechanism in the A-share market will help in the sustained development of the capital market, according to experts.

The Financial Stability and Development Committee under the State Council said after a meeting on Saturday that the ratio of direct financing in the market will increase after the registration-based IPO mechanism is implemented across the entire A-share market.

The registration-based IPO mechanism was first introduced in the technology-focused STAR Market at the Shanghai Stock Exchange on July 22, 2019. The mechanism was applied at the ChiNext board in the Shenzhen bourse on Aug 24 this year. The country’s revised Securities Law which took effect this March also stresses on the overall implementation of registration-based IPO mechanism.

The delisting mechanism should be further normalized while promoting the two-way opening-up of the country’s financial industry, the Committee said.

The China Securities Regulatory Commission stressed after a meeting on Friday that the registration-based IPO mechanism and a wholistic delisting system will further financial market reforms and consolidate capital market infrastructure. While attaching greater importance to direct financing, efforts should also be made to build a multi-tranche capital market, said the CSRC.

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