CSRC chairman reveals details of IPO reform plan

A top official at China's securities regulatory agency announced Tuesday that alongside the push toward a new registration system for initial public offerings (IPOs). reviews of information disclosure would also be strengthened.

"The move toward a registration-based system for IPOs is a key step in the reform measures for the capital market," Xiao Gang, chairman of the China Securities Regulatory Commission (CSRC). said during a speech at a forum held in Beijing.

His comments came four days after the release Friday of a document detailing a raft of reform plans decided on at the Third Plenary Session of the 18th Communist Party of China Central Committee.

Currently China has a verification system for IPOs, under which all listings must be approved by the CSRC, with rounds of reviews that sometimes last for several years.

This time-consuming process has been seen as one reason why the country's capital market has performed relatively poorly.

Under the new registration system, the regulatory body will have different duties and obligations.

As part of the reforms, "the CSRC will be in charge of reviewing the correctness, comprehensiveness and timeliness of all information disclosed by share issuers, rather than making final judgments about whether the applicant has the capability to make profits," Xiao noted.

But Xiao also said that the new registration system "doesn't mean the regulatory authority will relax regulations and let the capital market be awash with junk stocks."

Analysts said it could take a long time to complete the registration system due to the immaturity of the existing Chinese capital market.

"The immature pricing system for IPOs and investors will hinder the creation of the registration system," Tu Chunhui, general manager of a research department at China Development Bank Securities, told the Global Times Tuesday.

Tu noted that the lack of a properly developed delisting mechanism and properly qualified underwriters are also factors that could delay the process of reform.

Xiao admitted in his speech that other reform measures should be taken, including modifying the country's securities law, so as to allow the progress toward a registration-based system to happen more smoothly.