SHANGHAI, March 27 (Reuters) - China’s securities regulator said on Thursday that companies can issue an IPO on the Shanghai or Shenzhen stock exchange, as it tries to inject more flexibility into a system that has been prone to speculation and insider trading.
The statement, released on the China Securities Regulatory Commission’s official microblog account, said that where a company lists will no longer be determined by the number of shares it plan to issue.
Allowing firms to chose where they list will be good news for the Shenzhen exchange, which previously was largely restricted to handling small and mid-cap companies, though its Nasdaq-style ChiNext Composite Index of mostly high-tech start-ups has outperformed the SSEC index of top Shanghai listed shares over the past year.
The announcement also encouraged firms to list abroad or to list on over-the-counter equity trading platforms, which are geared towards small and medium-sized enterprises and offer much looser listing requirements than the country’s main exchanges.
The move comes as the two exchanges face a backlog of firms waiting to list on the market, with data from the regulator showing that as of March 20, 435 companies were waiting to list on the exchange.
Over-the-counter trading platforms have had limited popularity in China, despite several pilot projects aimed at increasing their usage since 2006. While some analysts see them as a viable option for small to mid-range companies to raise funds, others have concerns about liquidity issues
The statement also said that regulations on the issue of stocks may change this year, as the commission researches how to reform the registration system and launches revisions to the securities act. (Reporting By Natalie Thomas; Editing by; Ron Popeski)