New share issuance system reform urgently needed - to reasonably standardize the securities trading market

China Securities Regulatory Commission (CSRC) solicited public opinions on the Guiding Opinions on Further Reform and Improvement of the New Stock Issuance System (Draft for Comments) on June 22. The deadline is June 5. After the comment period, new stock issuance will be arranged after the formal release of the guiding opinions.

CSRC said that issuers and their principal underwriters should reasonably set a minimum subscription amount for each subscription based on the issuance scale and market conditions. An upper limit will be set for online single subscription accounts, which in principle shall not exceed one-thousandth of the number of shares issued online this time. For each stock issuance, any stock allocation object can only choose one way between offline or online for new stock subscription. All stock allocation objects participating in the offline pricing, subscription, and allocation of such stock will no longer participate in online subscriptions.

A CSRC news spokesperson said that for the issue of existing sales, further in-depth research will continue to be conducted and it will be launched when the market conditions are ripe.

The spokesperson said that the overall thinking behind the issuance system reform is: new stock pricing becomes more market-oriented and market constraints mechanisms are cultivated; promote issuers, investors, underwriters and other market participants to fulfill their responsibilities; pay more attention to the participation willingness of small and medium-sized investors. The expected goal of the new stock issuance system reform is: the price discovery function of new stocks is optimized and the internal restraint mechanism between buyers and sellers is strengthened; the effectiveness of the share allocation mechanism has been improved; under the premise of clear risks, the participation willingness of small and medium investors is valued; significantly enhance the risk awareness of the primary market.