China Proposes Stricter Regulations for Stock Trading and Delistings
China's securities regulator is taking decisive steps to bolster oversight of stock trading and listings, aiming to enhance market integrity and safeguard investor interests. The China Securities Regulatory Commission (CSRC) has unveiled draft rules to address issues ranging from initial public offerings (IPOs) to high-frequency trading.
Under the proposed rules, the CSRC plans to elevate the standards for IPOs and delistings while intensifying scrutiny over program trading. This move aligns with broader efforts to restore confidence in China's stock market, which has faced challenges despite recent rebounds.
CSRC Chairman Wu Qing emphasized the focus on protecting investors, especially small investors, through comprehensive supervision. The regulator aims to fortify listing requirements, requiring companies to demonstrate higher levels of sales and net profit, particularly for those eyeing the main board, ChiNext, and the STAR Market in Shanghai.
To ensure the quality of listed companies, the CSRC intends to increase onsite inspections of listing candidates and underwriters. Moreover, the regulator is tightening oversight of program trading, emphasizing fairness and market stability. Draft rules propose a reporting system for program trading, with stricter disclosure requirements and fees for high-frequency trading.
Additionally, the CSRC released guidelines specifically targeting compulsory delisting, forcing companies found guilty of serious falsification within a year or engaging in continuous falsification to delist. It also calls for a resolute crackdown on vicious and long-term systemic financial frauds.
It requires improving policies and regulations in areas such as mergers and acquisitions, encouraging and guiding leading companies to integrate industrial chains based on their main businesses.
The guideline also urged efforts to intensify delisting supervision, severely punish illegal activities such as financial fraud, insider trading and market manipulation, and optimize investor compensation remedy mechanisms.
China's regulatory initiatives signal a proactive approach to address market challenges and enhance investor confidence. By tightening regulations on stock trading and listings, and implementing stricter delisting guidelines, the country aims to foster a more robust and transparent financial ecosystem.
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