New Details Released on the Possibility of IPO Resumption
Security regulators in China issued new details on the plans to resume initial public offerings by next year therefore eliminating pricing and turnover controls for IPOs in detailing how a investor will participate is managed.
The China Securities Regulatory Commission already abandon their approved based listing system that the government officials has decided which companies will be getting the list and adopt a U.S. style of registering wherein the market will be decide reception and pricing of the IPOs. In a statement that was posted by the CSRC stated that it will not involve itself in the pricing of IPOs as part of its commitment in allowing the market to play a role in pricing assets. Even if there was no formal published cap on IPO pricing the past regulators have intervened in the pricing and the timing of new issued is deemed necessary.
Before IPOs were disrupted by a massive triple digit that came out on the first day that paid of heavily by connecting institutional investors which was followed up by declines that is below the original IPO price that later burned investors. To address the concern the CSRC forced the original stakeholder investor to buy back the shares if ever the prices will fall below the IPO price after two years in the listing,
The new exchange however said that they will also try and eliminate the rules that freeze trade in the stocks during the first day of trading if ever a turnover will exceed the high threshold. The new regulations are also requiring the participants in the IPO subscriptions to purchase 10,000 yuan worth of shares in different companies that are already listed in their portfolio.