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The registration-based system for initial public offerings, a key driver of the nation's capitalmarket reform, is likely to be implemented this year and the Shanghai Stock Exchange is gettingready to handle the responsibility, the bourse's Chairman Gui Minjie said on Friday in Beijing.
Gui, also a member of the National Committee of the Chinese People's Political ConsultativeConference, said the reform will be achieved after the National People's Congress amends theSecurities Law. Expectations are that the process would be completed this year, he said.
Wu Xiaoling, deputy director of the Financial and Economic Affairs Committee of the StandingCommittee of China's top legislative body－the National People's Congress－said on Thursdaythat the NPC will undertake the first review of the Securities Law in April. The second and thirdreviews are expected to be completed by October.
Gui said the bourse has been making preparations to take over the responsibility of vetting andregistering IPO applications after the NPC completes the amendments.
Unlike the current approval-based IPO system, the registration-based plan emphasizes more oninformation disclosure rather than financial performance requirements.
Under the current rules, which have been used for 13 years, mainland A-share listing applicantsshould go through multiple rounds of reviews lasting as long as several years to get approvalfrom the securities regulator.
Requirements include an annual net profit of more than 30 million yuan ($4.8 million) for threesuccessive years before listing. In addition, the proposed IPO price has to be in line with otherstocks in the same industry sector, irrespective of the applicant's performance.
Premier Li Keqiang has been urging the regulators including the China Securities RegulatoryCommission to accelerate the reform, and effectively lower the threshold for small and medium-sized companies to raise money from the stock market, and scrap the requirement of continuedprofitability for IPOs.
Analysts said the move emphasizes the role of the market in China's capital market, rather thangovernment's administrative interference, and will have positive influence over the economy in thelong run.
On Friday, the CSRC said it is studying the possibility of issuing securities and futures businesslicenses to commercial banks with built-in risk isolation system. But no timetable has been drawnup yet, CSRC spokesman Zhang Xiaojun said at a news conference.
Earlier reports said that several commercial lenders may get the nod for investment bankingbusiness.
Meanwhile, Zhang said that no transaction of stocks shorting by overseas investors has takenplace under the Shanghai-Hong Kong Stock Connect as of Thursday. The short sellingarrangement under the stock trading link was launched on Monday.