In a recent initiative aimed at bolstering the integrity of its stock market, China's securities watchdog has unveiled a set of preliminary guidelines. These guidelines are designed to refine the processes surrounding the listing and delisting of companies, as well as to impose stricter controls on quantitative (quant) trading practices.
The China Securities Regulatory Commission (CSRC, Financial) has announced its intention to heighten the criteria for delisting, compelling companies that fail to meet the mark to leave the market. This move is part of a broader effort to ensure that only financially sound firms remain listed, thereby safeguarding investor interests. The CSRC is seeking feedback from the public on these draft regulations.
With the goal of elevating the quality of entities listed on its exchanges, the CSRC plans to slightly raise the bar for financial metrics such as operating income and net profit for companies aspiring to join the main board or the technology-centric ChiNext. Additionally, the commission intends to broaden its inspection of firms undergoing the Initial Public Offering (IPO) process and the various intermediaries involved.
This regulatory overhaul follows a period of turbulence in China's stock market, which saw its indices dip to a five-year nadir in February. In response, the authorities have deployed a series of strategies aimed at restoring investor confidence.
Among the proposed measures is a set of stricter regulations for high-frequency trading activities, aimed at preserving market fairness. This includes the introduction of new reporting requirements and the application of variable fees. Furthermore, the CSRC is tightening its oversight of Chinese quant funds, particularly those employing complex algorithms and derivatives, following an incident in February where a fund manager was penalized for disrupting market order.
The CSRC's updated rules will also ensure that both domestic and international investors are incorporated into the transaction reporting framework, subjecting them to uniform standards of transaction monitoring.
