Small-firm exchange fully opened by govt

By Li Qiaoyi Source:Global Times Published: 2013-12-15 23:33:01

The State Council, China's cabinet, announced over the weekend that the national over-the-counter (OTC) market has opened up full access to qualified companies, offering a fresh incentive to the country's small businesses which are in need of funding.

Qualified companies nationwide are now allowed to file applications for a listing on the OTC exchange through underwriters, and therefore given an access to transfer public shares, obtain equity or bond financing and reorganize assets, according to the cabinet's issuance of its decision on Saturday.

The OTC exchange, called the National Equities Exchange and Quotations system, is a national share transfer platform for small and micro-sized businesses, and is also known as the New Third Board, in addition to the Shanghai Stock Exchange and the Shenzhen Stock Exchange.

Prior to the State Council's announcement, only companies listed in four high-tech zones in four different cities - Beijing, Tianjin, Shanghai and Wuhan, capital of Central China's Hubei Province - were qualified to be listed on the national OTC market, the China Securities Regulatory Commission (CSRC), the nation's top securities regulator, said in a statement posted Saturday on its website.

The announcement, which came on the heels of the CSRC's release on Friday of fresh details on plans for the resumption of IPOs in the nation, was hailed by market watchers as particularly exciting for the country's numerous small businesses.

"With the expansion to include all eligible enterprises [to the national OTC market], which is set to serve as an effective supplement to the main boards and advance the establishment of a multi-layer capital system in the country, small businesses yearning for capital will be offered greater access to fundraising," Li Daxiao, director of research with Shenzhen-based Yingda Securities Co, told the Global Times Sunday.

The national OTC transfer system mainly targets small innovative and promising businesses eyeing relatively small amount of funding, which will help alleviate pressure on expansion of the A-share market rather than result in a diversion of capital away from the A-share market, said the CSRC statement,

But Zhang Xin, a Beijing-based analyst at Guotai Junan Securities, also told the Global Times Sunday that underwriters will come under greater pressure, as the announcement emphasized toughened supervision over illegal activities such as untrue disclosure, insider trading and market manipulation.

Posted in: Economy

blog comments powered by Disqus