China Finalizes Rules for New Technology Exchange in Shanghai

(Bloomberg) -- China pushed through final regulations for a new stock-trading venue in Shanghai designed to encourage more technology companies to go public.

The Science and Technology Innovation Board will scrap limits on price and debut gains, and allow unprofitable companies to go public, but will not permit same-day buying and selling of stocks, according to rules from the Shanghai Stock Exchange released on Friday night.

The rules were pushed out a day after the regulator wrapped up a public review of draft framework rules, indicating Beijing may want to speed up the process.

The bourse, first announced by President Xi Jinping last year, is part of policy makers’ efforts to improve capital markets and implement financial industry supply side reform. The move also helps China stem an exodus of technology listings and build its own technological know-how.

Regulators have been working in overdrive, saying they are expediting preparations and working night and day to implement the important assignment.

New Rules

The new rules made some tweaks from a draft version released a month ago, but did not allow same-day settlement of trades which some market participants had pushed for. Following the principles of “a steady start and step-by-step processes,” selling shares bought on the same day was not included in this set of rules, according to a Q&A published on the Shanghai Stock Exchange.

The lockup period for core technical personnel was reduced to one year from three years in the final rules, while the stock exchange also clarified requirements for red-chips stocks to list.

“The technology and innovation board is not as simple as adding another exchange ... at its core it’s about system innovation and reform," said Yi Huiman, chairman of the China Securities Regulatory Commission on Wednesday. We will assess the results of the new exchange and push forward reforms on other trading venues, Yi said.

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