GEM draft listing rules mark major step in China's capital market innovation

BEIJING, May 9 -- The draft listing rules

for China's upcoming Growth Enterprise Market (GEM) had displayed the spirit of

prudence, innovation, efficiency and market orientation, analysts said.

It marked a major step in the development of the

country's first Nasdaq-style stock market, a vital part of China's capital

market innovation.

The draft was issued by China's Shenzhen Stock

Exchange Friday to solicit public opinion. With a major concern over risk

control, the document had set out a stricter delisting mechanism, information

disclosing rules, and more rigid stock sale restrictions for controlling

shareholders on GEM, compared with stocks trading on the main boards in Shanghai

and Shenzhen.

"We had designed the regulation in a way that better

protects investors, improves market efficiency, and promotes long-term and

healthy development of the market," an official of the Shenzhen Stock Exchange

said.

The design of the GEM system has distributed greater

responsibilities to market players such as accounting and law firms, and aimed

at laying a sound platform for the capital market, said analysts, adding that

much experience could be drawn from the GEM operations.

China Securities Regulatory Commission (CSRC)

published measures for initial public offerings and listing on GEM on March 31,

which have been in effect since the beginning of May.

It later issued draft measures governing the approval

committee and the sponsors of securities issuance for public feedback, which

nearly concluded April 24.

With the release of the listing rules draft, the

launch of the GEM is drawing nearer. Under the current financial crisis, it

would effectively expand the financing channels of smaller and middle-sized

companies, which were anxious to make use of the opportunity, said Hong Liang,

analyst from the China Galaxy Securities.