SHANGHAI: China could expand access to its primary over-the-counter (OTC) exchange as soon as Dec. 25, domestic media reported, as regulators try to provide more funding alternatives for smaller companies that produce the bulk of the country's GDP and jobs.
The official China Securities Journal quoted industry insiders saying that regulators will soon allow any "qualified" firm in the country to list on the central OTC market. Access was previously restricted to companies headquartered in select major cities.
The government also plans to implement a registration-based system for firms listing on the OTC, the report said, similar to a reform planned for initial public offerings (IPOs) on main boards.
That means that where once companies had to seek permission from the China Securities Regulatory Commission (CSRC) to list, in the future they will need only register, and the market will determine the timing and pricing of the issue -- similar to the way IPOS are regulated in developed economies.
The China Securities Journal said plans would be announced "in the near future," while China Financial Information, a respected online finance newspaper, published a similar report quoting unnamed insiders saying the plans were expected to be published on Dec. 25.
The move to ease access to the OTC market, which focuses on facilitating private placements in smaller Chinese firms, follows announcements that regulators will allow China's IPO market to re-start in early 2014.
IPOs have been frozen since late 2012, which regulators said was intended to give time to re-examine the financial conditions of the 800-plus firms in the queue. The move was widely considered an attempt to prop up investor sentiment, as the flood of IPOs was seen to be negative for share prices.
Beijing has been consistently trying to expand access to credit for small- and medium-sized enterprises (SMEs), which are usually too small to list but at the same time are too risky for Chinese banks to finance.
But analysts say initiatives such as OTC exchanges and high-yield bonds designed for use by smaller companies have so far been hamstrung by regulatory restrictions and lack of investor interest, while efforts to force banks to lend to SMEs have mostly backfired.
China's primary OTC market was originally launched in Beijing in 2006, with around 200 firms trading on the platform. Other Chinese cities have since announced plans to create local platforms
The official China Securities Journal quoted industry insiders saying that regulators will soon allow any "qualified" firm in the country to list on the central OTC market. Access was previously restricted to companies headquartered in select major cities.
The government also plans to implement a registration-based system for firms listing on the OTC, the report said, similar to a reform planned for initial public offerings (IPOs) on main boards.
That means that where once companies had to seek permission from the China Securities Regulatory Commission (CSRC) to list, in the future they will need only register, and the market will determine the timing and pricing of the issue -- similar to the way IPOS are regulated in developed economies.
The China Securities Journal said plans would be announced "in the near future," while China Financial Information, a respected online finance newspaper, published a similar report quoting unnamed insiders saying the plans were expected to be published on Dec. 25.
The move to ease access to the OTC market, which focuses on facilitating private placements in smaller Chinese firms, follows announcements that regulators will allow China's IPO market to re-start in early 2014.
IPOs have been frozen since late 2012, which regulators said was intended to give time to re-examine the financial conditions of the 800-plus firms in the queue. The move was widely considered an attempt to prop up investor sentiment, as the flood of IPOs was seen to be negative for share prices.
Beijing has been consistently trying to expand access to credit for small- and medium-sized enterprises (SMEs), which are usually too small to list but at the same time are too risky for Chinese banks to finance.
But analysts say initiatives such as OTC exchanges and high-yield bonds designed for use by smaller companies have so far been hamstrung by regulatory restrictions and lack of investor interest, while efforts to force banks to lend to SMEs have mostly backfired.
China's primary OTC market was originally launched in Beijing in 2006, with around 200 firms trading on the platform. Other Chinese cities have since announced plans to create local platforms
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