Regulator loosens grip on new listings

China is expected to take a significant step in its capital market reform after the market regulator decided to relinquish control over new listings and transfer them to the Shanghai and Shenzhen bourses.

Sources close to the China Securities Regulatory Commission said on Monday that the change is expected to come into effect from June 1. After that, all IPO applications will be vetted by the stock exchanges, while the CSRC's public offering review committee will be disbanded.

The move has been widely anticipated by investment bankers, stockbrokers and securities analysts since the CSRC initiated discussions early last year on its intention to abandon the principle of approval in favor of one that emphasizes voluntary disclosure by the management of enterprises that are seeking to raise capital in the stock market through new listings. The "registration" approach is widely adopted by capital markets in major financial centers around the world.