Implementing a registration-based IPO system has long been a priority for the government, and one that markets have been anticipating.
However, the process was delayed due to the summer stock market crash, which wiped nearly $5 trillion off the total market value between June and August, the Xinhua News Agency reported Monday.
Market will decide
Moving to a registration-based system is considered the most significant change in making the country's IPO mechanism more market-oriented, said Dong, adding that the new process will also ease up the logjam in the IPO pipeline.
Under the current system, companies wanting to go public are required to obtain approval from the CSRC, which generally takes a long time.
The Wall Street Journal reported on December 7 that there were about 675 companies awaiting approval from the CSRC to issue IPOs worth a total of about $63 billion.
With the registration-based process, which is widely used in mature stock markets in countries such as the US, the market decides which companies get listed and also determines the price, timing and scale of the IPOs.
Under the new system, the CSRC will focus on making sure that companies comply with information disclosure requirements, while also maintaining market order and protecting investors' rights, Xiao told NPC members on Monday.
The registration process is more conducive to fostering a stable and healthy capital market, and for guiding more capital to the real economy, Xiao noted.
Gradual process
Some have expressed concern that under the new system a large number of firms will rush to the market at the same time, but the CSRC has said that the process of implementing the new IPO system will be gradual and the floodgates won't open at once.
Analysts said that although the market will play a much larger role, it doesn't mean that companies will be able to get a listing whenever they want because there is still a process they will have to go through with stockbrokers and the stock exchanges.
Also, there will still be some administrative control of the total number of IPOs, said Xu Guangfu, a senior analyst at Shanghai Yinji Asset Management Co.
But the overall process will be a lot simpler and faster under the new system, which will benefit the capital market in China in the long run, as well as addressing the relative shortage of new stocks currently, Xu told the Global Times on Monday.
