China securities regulator to tighten regulations on listed firms, brokers

China’s top securities regulator vowed on Friday to strengthen regulations on listed firms and financial institutions to prevent risks in the stock market.

The China Securities Regulatory Commission (CSRC) issued draft guidelines on strengthening supervision of listed firms, securities brokers and public fund companies, and accelerating construction of first-class investment banks, Li Chao, vice chairman of the CSRC, told a press conference in Beijing.

The watchdog tightened scrutiny over quantitative trading, introduced fresh curbs on short selling, and vowed zero tolerance toward securities fraud this year, to revive a sluggish market that hit five-year lows in early February.

The CSRC said on Friday (Mar 15) it will also strengthen supervisions of company listings as part of efforts to improve the quality of listed firms.

Initial public offering (IPO) applications will be strictly vetted to prevent companies from excessive fundraising, while accounting fraud and false statements will be severely punished, according to the rules.

In addition, the CSRC will adopt “counter-cyclical adjustment” in the IPO market to take into account conditions of the secondary market, and will also boost onsite inspections on listing candidates.

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China’s benchmark CSI 300 Index has rebounded and is up 4 per cent this year but is still 40 per cent down from a peak hit in 2021, pressured by a slowing domestic economy, a deepening property crisis, capital outflows and rising political tensions with the West. REUTERS