China to expand IPO system

The securities regulators of China have published draft rules on Wednesday to expand the registration-based initial public offering IPO system, which is a big step towards reform of the world's second largest stock market.

The China Securities Regulatory Commission CSRC said that the U.S. style IPO system, which was adopted by Shanghai's STAR Market, Shenzhen ChiNext board and the Beijing Stock Exchange in a pilot scheme, will be expanded to the main boards.

The IPO reform is intended to make IPOs more transparent and predictable, and give the market the right of choice, the CSRC said in a statement.

Under an approval-based system, IPOs on the main boards in Shanghai and Shenzhen need a nod from the CSRC.

No daily trading limit is set for IPO shares during their first five trading days under the draft rules published on Wednesday.

On trading debuts, stocks are eligible for margin trading and securities lending.

The CSRC said the new IPO system doesn't mean quality requirements will be loosened, and that it would check to see if IPO issuance is in line with China's national industrial policy.