Beijing Bourse Weighs IPO Rule Overhaul as Capital Freeze Hits 700 Billion Yuan
Listen to the full version
The Beijing Stock Exchange is reviewing a possible overhaul of its initial public offering (IPO) subscription system to curb rampant speculation, as a surge in new listings ties up hundreds of billions of yuan in idle funds and weighs on market liquidity.
The bourse is evaluating the conditions for switching from its current cash-based subscription system to a market-capitalization-based allotment method. A person familiar with the matter told Caixin that exchange officials are assessing the prerequisites for such a change. The bourse has previously conducted related research with market participants. The move comes amid rumors, denied by several brokerages, that online testing for the new system was already underway.
The prospective reform would target the liquidity stress triggered by the current cash-upfront subscription model, which encourages investors to stockpile funds for arbitrage plays instead of holding shares—disrupting short-term financing markets in the process.
Unlock exclusive discounts with a Caixin group subscription — ideal for teams and organizations.
Subscribe to both Caixin Global and The Wall Street Journal — for the price of one.
- RELATED
- DIGEST HUB
Digest Hub
Back
- The Beijing Stock Exchange is considering switching its IPO subscription system from cash-based to market-capitalization-based to address liquidity issues and reduce speculation.
- Surging IPO demand has frozen up to 700 billion yuan, causing liquidity strains and driving up overnight borrowing costs.
- Listed companies in 2025 saw average first-day gains of 355%, fueling investor rush; proposed reforms aim to limit the need for large upfront cash deposits.
- Shenwan Hongyuan Group Co. Ltd.
- Liu Jing, an analyst at Shenwan Hongyuan Group Co. Ltd., highlighted the critical need for reform, noting that frozen capital is nearing 1 trillion yuan. She stated that the current IPO subscription model favors investors with deep pockets.
- MOST POPULAR
Sign in with Google
Sign in with Facebook
Sign in with 财新