China Securities Regulatory Commission strengthens the control over the IPO listings

The China Securities Regulatory Commission or CSRC set up a new committee in charge of reviewing IPO applications, in order to strengthen the control over the country’s public listings, prevent risks and protect investors interests. The committee has the ultimate say in deciding whether a company is qualified to go public in China.

In fact, only on January 23 this year, CSRC rejected six of seven initial public offering or IPO applications.

Abnormal financial conditions, inability to generate sustainable profits and questionable authenticity of application documents were among reasons for rejections.

Aside from tightened control of public listings, the CSRC created severe punishments to prevent market violations and make the capital market function properly. The CSRC decided on a record high of 224 administrative penalties in 2017 with the combined total of the fines rising 74.74 percent, to a historic high of 7.48 billion yuan ($1.14 billion). The fines were handed out for various violations, including information disclosure problems, market manipulation and insider trading.

It seems the efforts have paid off since the stock market in 2017 was much steadier compared with a year earlier. Only three trading days registered changes beyond 2 percent last year, and the fluctuation ratio of the benchmark Shanghai Composite Index recorded a historic low of almost 14 percent, according to the CSRC.