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China reforms IPO registration-based scheme

The China Securities Regulatory Commission (CSRC) has reformed the registration-based initial public offering (IPO) system to give the right of choice to the market and make IPOs more transparent and predictable. The US-style IPO system, which has been adopted by Shanghai’s Star Market, Shenzhen ChiNext board, and the Beijing Stock Exchange in a pilot scheme, will be expanded to the main boards. Currently, IPOs on the main boards in Shanghai and Shenzhen need a nod from the CSRC under an approval-based system. Under the draft rules, no daily trading limit is set for IPO shares during their first five trading days. In addition, stocks are eligible for margin trading and securities lending on trading debuts. The CSRC said the new IPO system would check to see if IPO issuance is in line with China’s national industrial policy.


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