CSRC tries to clear IPO pipeline

China’s securities regulator has decided to toughen its review of companies aiming to list on the A share market, according to several recent stories including a couple of  reports in Caixin.

All of the 882 companies waiting for China Securities Regulatory Commission (CSRC) approval to go public have been required to submit their financials for 2012 by the end of March. The regulator said it would check the results at randomly chosen firms to prevent fraud.

A significant number of IPOs may be pulled as a result and many in the securities industry do not sound terribly happy about this, as you might expect.

The change was administrative interference by the regulator to reduce the number of companies it needs to review for IPOs, which has built up to a record high, he said.

Another source from a securities underwriter agreed, saying the move was a veiled attempt by the CSRC to compel companies to withdrawing their listing requests.

However, in many ways this sounds very desirable. China obviously needs to tackle a large number of issues, but in the narrow context of the equity markets, one very important one is improving the quality of listed companies is a crucial step to make the exchange less of a casino and more of a venue for individuals to save and firms to obtain funding.  It’s encouraging to see the newly invigorated regulator addressing this, along with lesser moves such as tidying up loose ends like the B share market.


Leave a Reply

Your email address will not be published. Required fields are marked *