Caixin
Oct 02, 2018 02:40 PM
FINANCE

Securities Watchdog to Reshuffle Powerful Listing Review Panel

A September media briefing at the Beijing headquarters of the China Securities Regulatory Commission. Photo: VCG
A September media briefing at the Beijing headquarters of the China Securities Regulatory Commission. Photo: VCG

China’s securities watchdog will reshuffle the powerful panel that reviews IPO applications this month, as it tries to balance its goals of stronger oversight with a more streamlined listing process.

The current panel, which reviews new listings for the country’s two main boards in Shanghai and Shenzhen, and the Nasdaq-style ChiNext in Shenzhen, has 63 members. That group will continue to function until the new one is appointed and new members assume their duties, said Gao Li, spokeswoman for the China Securities Regulatory Commsion (CSRC), last Friday.

She did not provide any details on how the new panel will differ from the current one.

China’s IPO review process has grown increasingly fast and strict since the CSRC made major changes to staff selection of its review panel a year ago, recruiting two-thirds of members from within the commission’s ranks.

The panel reshuffle comes in the second year of the CSRC’s tougher stance on oversight of new share offerings, as it tries to improve the quality of companies that list on China’s stock markets. Lack of investor confidence, combined with a slowing economy, are major factors that have caused China’s stock markets to fall into bear territory this year, even as Western markets have rallied.

The current IPO reviewing panel approved 149 companies out of 454 applicants between Sept. 24 last year and Sept. 28, 2018, for an approval rate of 32.8%, according to the CSRC. That was down sharply from a 76.3% approval rate during the previous panel’s tenure in 2017, 89.8% in 2016, and 89% in 2015, according to data compiled by Caixin.

The tighter grip came after CSRC Chairman Liu Shiyu promised in late 2017 to set a high bar for submissions to help “guard against situations where an IPO is approved without due examination.” At the same time Liu also said he wanted to reduce the backlog of applications within two to three years.

As a result, only 127 companies were still waiting to have their applications reviewed by the CSRC as of Sept. 28, down significantly from a peak of 895 at the end of June 2016.

The faster reviews and lower approval rate also reflects the government’s hardline attitude towards fighting graft in the financial sector, and zero tolerance for dishonesty such as corruption in key posts at the securities watchdog, the CSRC said in a previous statement.

Yao Gang, former CSRC vice chairman and former head of the committee overseeing the department responsible for IPO applications, was sentenced Friday to 18 years in prison for corruption and insider trading.

Several CSRC officials who approved an IPO for the now financially crippled Leshi Internet Information & Technology Corp. have also been put under investigation on corruption allegations.

Both gestures reflect a crackdown on regulators and panelists who try to take advantage of their posts to make profits.

The tighter reviews have intensified workloads for each panelist, as currently “none dares to take the duty lightly, and all are in highly stressful positions,” a source close to the CSRC told Caixin. One panel member, Li Guochun, died last month after collapsing while at breakfast in the CSRC cafeteria.

Contact reporter Leng Cheng (chengleng@caixin.com)


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