Exchange acts to better serve real economy

In a move to streamline its trading structure, the Shenzhen Stock Exchange merged its main board and small and medium-sized enterprises board on Tuesday.

Merging the two boards will give the bourse a main board and a start-up board — the Nasdaq-style ChiNext board — resulting in a simpler structure similar to the Shanghai Stock Exchange.

The China Securities Regulatory Commission said in statement that after the merger, “The main board and the ChiNext will each have their own focus and complement each other so as to meet the financing needs of enterprises at different stages of development.”

Since its establishment in 2004, the SME board of the Shenzhen Stock Exchange had made a series of meaningful explorations. But its business scope had overlapped with the main board after the opening of the ChiNext in Shenzhen and Star Market in Shanghai, and it had become increasingly similar to the main board in terms of the size of its market value, company characteristics, transaction style and market performances.

The main board of the Shenzhen Stock Exchange has not seen any new IPOs over the past three years, and it has attracted no more than 10 companies since 2001. Its market value is about two-thirds of the SME board. After the merger, the number of listed companies on the new main board, which also includes the growth enterprise market board, will be more than 1,470.

The merging of the two boards is conducive to improving direct financing efficiency, unifying supervisory standards, lowering supervision costs and paving the way for the rollout of registration reform.

This move is in line with the requirements proposed by the Government Work Report this year, as well as the objectives set in the 14th Five-Year Plan (2021-25) that the authorities should give full play to the functions of a multi-layer market, expand financing channels for market players, and deepen supplyside structural reform in the financing sector.

The provision of better financial services and support to enterprises is conducive to further enhancing the capital marketization, fostering a smooth flow of resource elements, and expanding financing channels for market players, and deepening supply-side structural reform in the financial sector.