CSRC Accelerates IPO Processing Times
(Beijing) — China's securities regulator has shortened the processing time for companies seeking to list on domestic stock exchanges in a bid to reduce a waiting list of nearly 800 applicants and pave the way for reform of initial public offering (IPO) procedures.
As of Friday, the China Securities Regulatory Commission (CSRC) had approved 38 companies in three batches to start the IPO process in November, a monthly high for the year and already 10 more than the total number of approvals in October, according to figures released by Wind, a Chinese financial data provider.
Unlike many developed markets, when and if a company can issue new shares publicly in China is solely under the control of securities regulators, and the process can take months and even years.
An investment banker told Caixin that the CSRC had recently cut the processing time by up to four months in a bid to prune a long waiting list. According to data from the CSRC, 790 companies were seeking to go public as of Nov. 10.
Another reason for the securities regulator to speed up the IPO approval process is to smooth the way for stock market reform that will lead to a registration-based mechanism similar to the one adopted in the U.S. and some other mature markets, said Xu Gao, chief economist of China Everbright Securities.
“A registration-based system is a step in the right direction, and accelerating processing times for IPO applications will ease pressure, test the water for reform, and channel more funds into the real economy," Xu said.
In December 2015, the National People's Congress, China's legislature, authorized the State Council, the cabinet, to amend the securities law, facilitating registration reform for IPO applications on the Shanghai and Shenzhen stock exchanges. Authorities believe the move will help companies reduce financial leverage and allow the market to play a decisive role in allocating assets. To date, no time frame for the reform has been specified.
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