Update: Seven Things to Know About China’s Latest IPO System Overhaul

By Quan Yue, Yue Yue, Zhang Ziyu, Zhang Yukun and Denise Jia

After testing the registration-based mechanism in China’s three smaller markets, regulators are now planning to roll it out to the two main boards in Shanghai and Shenzhen.

China is about to take a major step forward in the overhaul of the country’s $12.7 trillion stock market with plans to roll out its registration-based IPO system to the country’s two biggest boards in Shanghai and Shenzhen, completing a shift that began in 2019 when the new mechanism was first used.

The long-awaited change will give markets and investors a bigger say in deciding on the value of companies seeking to raise funds on the main bourses, make the IPO system more transparent, and put more responsibility for ensuring applications comply with regulations onto the shoulders of sponsors and the stock exchanges. The top securities regulator will no longer decide on pricing or approve listings, with its role becoming more supervisory.

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