Full A-shr market gets new IPO system

China extended registration-based IPOs to the whole A-share market on Friday, a key step in China's capital market reform that experts said will lift market efficiency and boost the real economy.

The China Securities Regulatory Commission, stock exchanges and market infrastructure providers released a total of 165 sets of rules on Friday to fully implement the registration-based stock issuance system.

Taking effect immediately, the rules have made the registration-based system applicable to the whole market and all kinds of public stock offerings, the commission said in a statement on Friday.

The new rules have streamlined listing requirements, abolished administrative restrictions on the price and size of IPOs, and removed the committees at the CSRC that were until now tasked to review and approve listings and listed companies' mergers and acquisitions.

Market supervision and investor protection stand strengthened under the new rules, as legal breaches in the process of securities issuance and underwriting will be strictly punished according to the law, the CSRC said.

Widely used in overseas markets, the registration-based system refers to a stock issuance mechanism that gives the market a decisive role in IPOs and also facilitates the listing of growth-oriented companies.

In the A-share market, the system was introduced in Shanghai's STAR Market in 2019, Shenzhen's ChiNext in 2020 and the Beijing Stock Exchange in 2021. Friday's move has made the main boards of the Shanghai and Shenzhen exchanges eligible for registration-based IPOs, marking an abolishment of the approval-based system.

Chen Mengjie, chief strategist with Yuekai Securities, said the adoption of registration-based IPOs across the board will likely facilitate the financing of enterprises in the industries, in line with national strategic development, helping address technology bottlenecks and realize the autonomy and security of the country's development.

Among the emerging sectors that may benefit are the new-generation information technology, high-end equipment manufacturing, biomedicine, new energy, and digital and creative industries, Chen said.

The move toward registration-based IPOs across the whole market came after the CSRC solicited public opinion on relevant draft rules from Feb 1 to Thursday.