SHANGHAI (Reuters) – China’s securities regulator on Friday released draft rules to tighten regulations on company listings, delistings and quantitative trading, aimed at improving the stock market and protecting investors’ interests.
The China Securities Regulatory Commission (CSRC) will strengthen delisting requirements to force ineligible companies to exit the market and step up efforts to audit delistings, according to draft rules soliciting public opinion.
In order to improve the quality of listed companies, the CSRC said it plans to moderately raise operating profit and net profit requirements for companies listed on the main board and high-tech-focused ChiNext companies. It will also expand on-site inspections of companies undergoing IPO examination and related intermediaries.
The proposed rules come after China’s stock market fell to a five-year low in February and authorities introduced a number of measures to restore investor confidence.
The CSRC also proposed stricter and differentiated regulatory requirements for high-frequency trading by implementing additional reporting mechanisms and imposing differentiated fees to maintain market fairness.
Chinese quantitative funds that use derivatives and data-driven computer models are facing greater regulatory scrutiny. In February, the stock exchange banned the fund manager from trading for three days for violating rules on orderly trading.
Both domestic and foreign capital will be included in the transaction reporting system and will be subject to the same transaction monitoring standards, the CSRC added.
(Reporting by Shanghai and Beijing newsrooms; Editing by David Goodman and Susan Fenton)
