Market reaction is key to Shanghai board
April 16, 2010 | BY
clpstaff &clp articles &China's securities regulator is concerned about the effect that foreign listings may have on the domestic market, as the wait goes on for an international…
China's securities regulator is concerned about the effect that foreign listings may have on the domestic market, as the wait goes on for an international board at the Shanghai Stock Exchange (SSE).
“The regulator would like to have the public invest in good foreign companies. If there are too many listings at once, this may affect the market,” said a partner at a well-known PRC law firm, hinting at the potential lack of capacity and decrease in share values as a result.
Draft listing and trading rules for the listing of foreign-registered companies were reportedly completed on March 9 2010, as announced by the SSE. Specialists seem to be in agreement that the current draft rules will not likely need to undergo significant changes.
“All the experts I've heard from don't feel there is anything major that needs to be changed in the legal framework,” said the partner. “The technical hurdles are not too difficult to be tackled.”
The China Securities Regulatory Commission (CSRC) is the PRC's securities regulator. It first released a draft regulation of a pilot programme allowing red-chip companies to list on the A-share exchange in May 2007. This was its first step toward realising the launch of an international board.
Key clarifications expected to be addressed in the draft rules include accounting standards, listing requirements and thresholds, share sale limits, and rules governing how raised funds can be used.
The draft is not yet available to the public as details are still being fine-tuned with a CSRC panel which is reviewing the document. Additionally, there is no further clarity on the timeline.
“It's still a moving target,” said another commentator.
Several sources contacted by CLP said they did not expect the draft rules to be finalised until the end of 2010, at the earliest.
“There are a few other priorities the CSRC has on its agenda right now such as stock index futures and margin lending, which probably are their two top priorities for 2010,” said Boss & Young Shanghai partner Hubert Tse. He is advising several international financial institutions and corporates on their planned initial public offerings on the Shanghai international bourse. CM
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