Under the guidance of the China Securities Regulatory Commission (CSRC), the Shanghai Stock Exchange (SSE) plans to revise the two sets of business rules, including the Measures of Shanghai Stock Exchange for Implementation of Issuance and Underwriting of Shares on the Science and Technology Innovation Board and the Business Guidelines of Shanghai Stock Exchange for Issuance and Underwriting of Shares on the Science and Technology Innovation Board (hereinafter collectively referred to as the “Business Rules”). The aim is to give better play to the function of the market-oriented issuance and underwriting mechanism for the SSE STAR Market, enhance the equilibrium between buyers and sellers, enhance the regulation of offline investors’ quotation, and improve the effectiveness of the capital market in serving the real economy under the registration-based IPO system. Public opinions will be solicited in the market from now until September 5.
The issuance of new shares has been generally conducted in a stable and orderly manner since the establishment of the market-oriented issuance and underwriting mechanism for the SSE STAR Market two years ago. However, in practice, some new situations and problems have emerged where some offline investors paid more attention to strategy than research, conducted “crowd quoting” in order to qualify, and disrupted the order of issuance. Therefore, the SSE plans to optimize and adjust the pricing mechanism for the IPO on the SSE STAR Market in line with the market-oriented and law-based principles and considering both fairness and efficiency of new share issuance under the registration-based IPO system. All this aims to provide favorable conditions for investors to participate in offline inquiry and quotation in a regulated manner, enhance the equilibrium between buyers and sellers, enhance the supervision of the issuance and underwriting processes, and to form a sound market ecosystem for new stock issuance.
The main revisions to the rules are as follows. First, the percentage of the highest quotes to be rejected will be adjusted. The percentage will be changed from “not less than 10%” to “not more than 3%”. Second, the requirement for the IPO pricing to be linked to the subscription arrangements and the number of special announcements on investment risks will be cancelled. It is clarified that if the determined issue price is higher than the average of the prices offered by offline investors upon the completion of the initial inquiry, the special announcement on investment risks needs to be issued only once before the subscription, without the need to make arrangements for delaying subscription. Third, the regulation of quotation will be enhanced. The regulatory requirements for offline investors to participate in the inquiry and quotation for IPO on the SSE STAR Market will be clarified further, and the possible violations will be included into the scope of self-regulatory supervision. If any violator is suspected of breaking laws and regulations for the issuing and underwriting business or in asking for quotations, the SSE will report relevant clues to the CSRC for investigation, and if any violator is suspected of committing a crime, the judicial authorities shall investigate criminal responsibility according to law.
After the collection, evaluation and absorption of relevant feedbacks, the SSE will revise and improve the Business Rules in a timely manner. Going forward, under the guidance of the CSRC, the SSE will serve the high-quality development of the real economy by reinforcing the supervision on the stock issuance and underwriting process on the SSE STAR Market, enhancing the equilibrium between buyers and sellers, improving issuance efficiency, and allow the SSE STAR Market to better perform the function of raising capital.
Notice of Soliciting Public Opinions on the Measures of Shanghai Stock Exchange for Implementation of Issuance and Underwriting of Shares on the Science and Technology Innovation Board (Draft for Comments) and the No. 1 Guidelines of Shanghai Stock Exchange for Application of Rules for Issuance and Underwriting of Shares on the Science and Technology Innovation Board - Initial Public Offering of Shares (Draft for Comments)