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Agricultural Development Bank of China
Economy

Platform tailored for innovation-oriented SMEs -- Beijing Stock Exchange to be launched

September 09, 2021


Abstract : As a specialized platform serving innovation-oriented small and medium-sized enterprises (SMEs), the Beijing Stock Exchange will facilitate such companies' flotation so as to improve the country's multi-layer capital market with Chinese characteristics.

BEIJING, Sept. 9 (Xinhua) -- Since the news of setting up a new stock exchange in Beijing was announced, relevant parties have been making intensive efforts to formulate regulations and get the systems ready. Beijing Stock Exchange is widely regarded as a complementation to Shanghai Stock Exchange and Shenzhen Stock Exchange. As a specialized platform serving innovation-oriented small and medium-sized enterprises (SMEs), Beijing Stock Exchange will facilitate such companies' flotation so as to improve the country's multi-layer capital market with Chinese characteristics.

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File photo shows the view of the skyscrapers of the Central Business District (CBD) in Beijing, capital of China. (Xinhua/Chen Zhonghao)

-- Taking the selected layer as the basis

According to the China Securities Regulatory Commission (CSRC), the Beijing Stock Exchange will be based on the selected layer of China's National Equities Exchange and Quotations (NEEQ), or the new third board.

As an exploratory measure of better serving the SMEs in the capital market, the new third board, since its official operation in 2013, has established a structure composed of the basic layer, innovation layer, and selected layer, providing all-around services for the SMEs of various types at different stages.

At the press conference held by the CSRC recently, an official in charge said that since the opening of the selected layer on July 27, 2020, various market-oriented institutional arrangements such as public offering and continuous auction have initially withstood the test of the market. It effectively played its role of raising funds and trading stocks, significantly increased the pricing and trading efficiency, and attracted a group of highly competitive SMEs with an average price-earnings ratio of more than 33 times and an average market value of more than 2.5 billion yuan. A well-performed the new third board market has laid the institutional, corporate and market foundation for the Beijing Stock Exchange.

All the listed companies on the selected layer will be transferred into listed companies on the Beijing Stock Exchange. Companies to be listed on the new stock exchange will come from eligible listed companies on the innovation layer. The basic layer and innovation layer of the new third board will remain their status as the national stock exchange platforms established in line with the Securities Law. All listed companies on these two layers will still be non-listed public companies and will continue improving their market services.

-- Exploring institutional arrangements suited for the SMEs

Aiming at buildinga stock exchange tailored for innovation-oriented SMEs, the Beijing Stock Exchange has attracted much attention regarding its basic systems.

It is learned the Beijing Stock Exchange will generally continue the basic systems of the selected layer, while establishing the public offering and information disclosure systems tailored to innovation-oriented SMEs.

In terms of financing access, it will highlight the operational features of innovation-oriented SMEs, generally continue the requirements for the listing on the selected layer and other IPO qualifications such as profitability, prospects of future growth, market acceptance and R&D capabilities, and improve the inclusiveness and accuracy. In addition, it will improve the financing mechanisms for public offering and targeted issuance, introduce more financing tools, and provide more pricing methods, such as direct pricing, inquiry and bidding, to meet diversified needs of the SMEs.

As to trading systems, it will continue the flexible trading systems of the selected layer and introduce continuous auction. No price limit will be placed on the first trading day of a new stock, and a maximum 30 percent of rise or fall will be allowed on the next day, to increase market flexibility. It will continue the suitability management of investors, promote the equilibrium of buyers and sellers and prevent market speculation.

Besides, it will strictly abide by the legal framework for the supervision of listed companies, maintain a market eco-system in which enterprises get listed and delisted and are able to do so, establish a diversified system of delisting indicators, and continue the board transfersystem so that mature listed companies on the Beijing Stock Exchange may choose to transfer to the Shanghai and Shenzhen Stock Exchanges for listing.

-- Establishing a multi-layer capital market system

The Beijing Stock Exchange will aim to help the SMEs to raise funds at reasonable prices and meet the regular transaction needs of buyers and sellers, to enhance the market functions, and improve the market eco-system and realize sustainable and healthy development.

The Beijing Stock Exchange will focus on innovation-oriented SMEs which are  smaller in size, and more novel. It will build a progressive market structure comprising the basic layer and innovation layer on the new third board and the Beijing Stock Exchange, raise the coverage of the capital market, and increase the ratio of direct financing.

As to institutional arrangements, it will establish basic systems suitable to the SMEs, and insist on selecting eligible enterprises on the innovation layer for listing. In regard to market operation, it will focus on qualified investors. Its investor composition and risk preferences will be largely different from the other two stock exchanges, and will match the risk features of innovation-oriented SMEs, thus forming an environment featured with long-term and rational investment.

(Edited by Bao Nuomin with Xinhua Silk Road, baonuomin@xinhua.org)

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Keyword: Beijing Stock Exchange

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