Regional equity markets
At an executive meeting on Wednesday, the State Council, China’s Cabinet, approved a policy to regulate regional equity markets.
The new regulation makes clear the regional equity markets are to act as financing channels for local small businesses.
The new policy aims to enhance regulations for the regional equity markets to boost their role in diversified financing channels for the country’s medium-, small- and micro-sized businesses and encourage private investment.
According to the regulation, regional equity markets offer financing flexibility for small businesses and technological innovation. While such firms tend to be financially vulnerable and carry greater risks, they are expected to play an important role in catalyzing economic transition and boosting social investment by introducing new business models and industries.
Regional equity markets mainly provide financing services for medium-, small- and micro-businesses within their provincial borders, while each regional market is allowed to have only one operating agency.
As of November last year, 40 regional equity markets have been set up across the country with over 15,900 companies.
Meanwhile, a qualified investor system will be put in place. Only legal entities meeting set requirements, partnership businesses, and individuals with sound financial backgrounds who are capable of sustaining risks will be able to invest.
In addition, local authorities and related central government departments are required to make joint effort in regional equity market supervision. Provincial-level governments will be responsible for market oversight and risk assessment, while China Securities Regulatory Commission will be responsible for specific regulations on the issuing of equities.