Steady pace key to listing reforms

The China Securities Regulatory Commission (CSRC) set the tone at the national securities supervision work conference held last week, confirming that the government would play a "vigorous yet steady" role in promoting registration-based IPO reforms in China's A-share market.

The transition away from an approval-based listing system is long overdue. Switching to registration-based approvals of IPOs and share offers is part of a systematic reform project designed to give market forces more sway over the allocation of resources.

Such steps are necessary at China's current stage of economic development. An increasing capital scale and a higher degree of market freedom call for the introduction of a clear market-oriented, disclosure-based stock issuance and listing mechanism.

In terms of implementation, steps should be taken slowly. Registration-based reforms could trigger an immediate reaction from China's stock market, since such rules would involve nearly all market participants. Moreover, any new registration-based system would have to inherit an earlier system whereby shares were issued only with the approval of the CSRC - given their implications, reforms would have to be gradual.