China's top stock regulator pledges more opening to foreign financial institutions
SHANGHAI Jan 23 (Reuters) - China will amend its laws and regulations so as to gradually open its securities and futures industries to foreign financial institutions, its top stock regulator said, without giving a specific timetable.
China will aim to abolish limits on the size of stakes foreign firms can take in Chinese securities institutions and permit them to set up wholly owned entities and branches, Xiao Gang, Chairman of the China Securities Regulatory Commission, said in speech published in the regulator's website, www.csrc.gov.cn, late on Wednesday.
It will also aim to lift business restrictions on Sino-foreign joint venture securities houses, Xiao told the annual meeting on securities and futures work for 2014.
China currently limits foreign firms to hold up to a 49 percent stake in joint venture securities houses, and tightly limits the activities those joint ventures may engage in, in particular a ban on underwriting business.
Xiao also repeated in the speech that the CSRC is planning to move towards a registration-based system for initial public offerings from the current approval system, but added that the process would be gradual.
January saw Chinese IPOs resume for the first time in more than a year, but multiple firms subsequently suspended their applications following criticism that the proposed listings were priced was too high and appeared to be intended to allow management teams to cash out their existing stakes at a premium.
Chinese bourses have been some of the world's worst performing equities markets in recent years, still down around 60 percent from a peak in 2007, and the resumption of IPOs has proved a fresh headache for regulators who are trying to both liberalise the system for long-term benefit while restoring confidence to improve short-term performance.
Unfortunately for both regulators and listed Chinese firms, the resumption of IPOs has further hammered domestic stock indexes, knocking 10 percent off the CSI300 Index that tracks China's largest listed firms since early December.
On Wednesday a U.S. judge ruled that the Chinese units of "Big Four" accounting firms should be suspended from practicing in the United States, putting up an additional barrier to Chinese companies hoping to list overseas. (Reporting by Lu Jianxin and Pete Sweeney; Editing by Chris Gallagher)